JERUSALEM, 17 June 2004 — Israel began construction work yesterday to incorporate the major Jewish settlement of Ariel within its West Bank separation wall, Palestinian security sources said. They said a bulldozer was leveling land around the village of Iskaka, to the southeast of Ariel, some 20 kilometers inside the West Bank. Hundreds of villagers protested against the first day of building work vowing to fight tooth and nail against the destruction of their land.

In Beijing, United Nations Secretary-General Kofi Annan yesterday called the status quo in the Middle East “unacceptable,” slamming efforts to implement a road map for peace as “deeply unsatisfactory.”

“The road back to the road map will be difficult,” Annan said in a message delivered in his absence at a UN-sponsored Mideast seminar in Beijing. “But the status quo is simply unacceptable.”

“Despite the clarity of the quartet’s road map, despite its acceptance by both sides, and despite the reciprocal and reasonable nature of the steps it calls for to realize the vision of two states, Israel and Palestine, living side by side in security, efforts to implement it remain deeply unsatisfactory,” Annan said.

The quartet recently moved to revive the road map by endorsing Israeli Prime Minister Ariel Sharon’s plan to pull out of the Gaza Strip.

Despite the new efforts to reinvigorate the quartet process, Annan said he was discouraged by mounting instances of violence in the tortured region.

In an interview with German newsweekly Stern to be published today Palestinian leader Yasser Arafat called on Europe to do more to advance the road map for Middle East peace. “There must be a strong push from the quartet committee, especially from Europe,” Arafat said, when asked about the plan put forward by the European Union, Russia, the United Nations and the United States which foresees the creation of an independent Palestinian state by 2005. “(The Europeans) have a very important chance to play this role. They have to be strong and (act) quickly. The next six months will be important,” he said, according to a transcript of Arafat’s remarks in English provided by Stern. Arafat said Israel should seize the moment presented by Arab reform efforts to make a new bid for peace.

Meanwhile, Israeli Prime Minister Ariel Sharon is preparing to invite the opposition Labour Party into his government to pursue his Gaza withdrawal plan, political sources said yesterday.

Aides said the prime minister was breathing easier a day after Israel’s attorney-general closed a long-running corruption investigation that had threatened to topple him and derail his plan for “disengaging” from conflict with Palestinians.

Political sources said Sharon and Shimon Peres, head of the center-left Labor Party, had agreed to meet early next week to discuss prospects for joining his ruling coalition, which has been hit by far-right defections over his Gaza plan. Labour, a supporter of withdrawals from occupied land, had been reluctant to throw the right-wing prime minister a lifeline while the bribery case loomed over his political future. With Labour on board, Sharon would restore his parliamentary majority.

That would give new impetus to Sharon’s blueprint for removing all 21 Jewish settlements in Gaza and four of 120 in the West Bank by the end of 2005 -- a plan opposed by hard-liners but backed by a majority of Israelis. “If Labour joins, it will give a big boost to Sharon’s disengagement strategy,” a Sharon confidant said, predicting it would take weeks to work out terms for a “unity” government.

The groundwork was laid when Peres, a veteran peacemaker, called Sharon to congratulate him on Attorney-General Menachem Mazuz’s finding on Tuesday that there was insufficient evidence to indict the prime minister.

Peres, who could expect to hold a senior portfolio such as foreign minister in any coalition with Sharon’s rightist Likud party, signaled he was open to negotiations.

“Labour has one consideration -- what will bring peace closer and advance evacuation of Gaza,” Peres told Israel Radio. But several key figures in both parties have vowed to fight against a Likud-Labour coalition. The parties teamed up in an uneasy alliance in Sharon’s first term from 2001 to 2003, but it collapsed in a dispute over settlement funding.

In Nablus, a church and two mosques were damaged during an Israeli Army operation yesterday in the West Bank city of Nablus, an AFP correspondent witnessed.

The damage occurred when the army dynamited blocs of concrete that had been placed in alleyways in the casbah area by Palestinian activists in a bid to prevent Israeli patrols there.

In Jenin. Israeli forces shot dead two Palestinians and arrested several other suspects yesterday. Witnesses said an Israeli undercover unit entered Jenin early in the morning, cornered a number of Palestinians and killed 25-year-old Islamic Jihad member Majed Al-Saadi. A taxi driver shot by the troops died later in hospital.