The tabling of the Arab proposals came after the 16 July meeting in New York of the quartet of the US, UN, EU and Russia, set up to co-ordinate international diplomatic efforts to solve the Palestinian problem. The quartet issued a general statement calling for the establishment of a Palestinian state, an end to Palestinian acts of violence and a halt to Israeli settlement activity. However, it was evident that there were differences between the US and the three other parties about the role of Palestinian leader Yasser Arafat and about the US/Israeli emphasis on security.

The Arab proposals provide for a possible downgrading of Arafat's role following parliamentary and presidential elections to be held in early 2003 - assuming that Arafat wins the poll. US Secretary of State Colin Powell, who represented Washington at the quartet talks, said that the administration would be prepared to consider an arrangement in which Arafat remained as a figurehead leader in a Palestinian government with a different prime minister exercising day-to-day control.

The Arab proposals have been drawn up following intensive discussions with the Palestinian Authority. Egypt has played a prominent role in these discussions, with intelligence chief Omar Sulaiman making frequent visits to Ramallah. President Mubarak also held talks in Alexandria on 15 July with Israeli Defence Minister Benjamin Ben Eliezer.

The latest diplomatic moves come against the background of a fresh flare-up of violence in the region. Eight Israeli settlers were killed on 16 July when Palestinian gunmen attacked their bus in the northern West Bank. Two days later, five people were killed in a suicide bomb attack in Tel Aviv. Following the attacks, Israel said it would not go ahead with earlier plans to reduce its military presence in seven reoccupied West Bank towns.