AL QUDS, June 18: Palestinian leader Yasser Arafat recognized the Jewish character of Israel in an interview published on Friday and stressed his readiness for compromise, including on the thorny issue of refugees.

Asked by the Haaretz daily whether he recognized that Israel has to "keep being a Jewish state", Mr Arafat answered in English from his battered West Bank headquarters: "definitely."

He said a 1988 Palestinian National Council (PNC) meeting in Algiers had accepted this "openly and officially". Israel's right to live within secure borders were affirmed at the meeting, without, however, highlighting its Jewish identity.

The veteran leader said no Palestinian could default on that declaration, which he termed "very important", adding that it was "reconfirmed in the presence of president Clinton in 1996".

In 1996, the PNC removed a clause denying Israel's right to exist from the Palestinian national charter to the great satisfaction of the then US president Bill Clinton.

The amendment was confirmed in 1998 during a landmark meeting with Mr Clinton in the Gaza Strip. Yasser Arafat also said some four million Palestinian refugees, who either left or were expelled from their land after the creation of Israel in 1948, could not all return to their homes now in the Jewish state.

Israel argues that the refugees' right of return would obliterate its Jewish identity. "They are living in many places, in Jordan, in Egypt, in north Europe, in Germany. They will not return," Mr Arafat told the daily, speaking of the refugees.

"Why not to give the chance for our people? Especially in Beirut, who are living in Lebanon, in a very, very, very bad circumstances... they are less than 200,000, all of them". Palestinian refugees who resettled in Lebanon have no legal recognition and limited job opportunities.

"Why the Muslim from Russia has a right to return and the Muslim from Palestine has not the right to return? And why the Christian from Russia has the right to come and the Palestinian Christian has not the right to come?," he asked.

A number of Russians who emigrated en masse to Israel in the 1990s, under the Jewish state's law of return, turned out to be Muslims and Christians as well as Jews. Mr Arafat also said he would accept a territorial compromise with Israel that included land "swaps" under which Palestinians would recover "between 97 and 98 percent" of their land occupied by Israel after the 1967 war.

Under a deal returning the annexed eastern sector of Al Quds to Palestinian sovereignty, Mr Arafat would also accept Israel's control of "the Wailing Wall and the Jewish quarter, with a passage freely under your control".

A similar compromise was discussed at the Jan 2001 Israeli-Palestinian peace summit in Taba, Egypt. But it failed to materialize after the collapse of the US-brokered Camp David talks in July 2000 and because of a lack of parliamentary support for then Israeli prime minister Ehud Barak.

Mr Arafat also indicated that his security services would police the Gaza Strip in the wake of an Israeli withdrawal. "We have done it many times. We have done it in Gaza when I was there, and you remember how many clashes we had with Hamas and with others.

"Even against anyone from Fatah who comes out against the law. I can't keep silent with him," he said about potential dissidents within his own political faction. -AFP