Israeli Prime Minister Ariel Sharon said on 6 May that, while he would be happy to meet his Palestinian counterpart Mahmoud Abbas, he would not recognise a Palestinian state unless insistence on the right of return for Palestinian refugees is abandoned.

The issue, among the most emotive subjects of the Palestinians' 55-year struggle for sovereignty, is one of the permanent status concerns due to be discussed in 2004-05 as a final precursor to the establishment of a Palestinian state. Speaking in his first broadcast interview since he took office at the end of April, Abbas, also known as Abu Mazen, flatly rejected Sharon's latest condition. 'The refugee issue is a final status issue, so it should be kept for the final status,' he told a Palestinian satellite television channel on 6 May. 'Why should I drop the refugees' right to return? I do not have this right.'

Mazen reiterated his government's willingness to push forward with the first stages of the roadmap, which involve the Palestinian Authority (PA) clamping down on armed Palestinian groups. However, he said there is 'a big question mark over the roadmap - that is, Israel does not want to implement it'.

In a move to increase the PA's ability to curb anti-Israeli violence, Mazen is reported to have authorised Mohammed Dahlan to restructure the Interior Ministry. His decision makes Dahlan Interior Minister in all but title and re-ignites speculation over the power struggle between Mazen and Palestinian leader Yasser Arafat, who had opposed the Prime Minister's attempt to appoint Dahlan to a senior cabinet post.

Arafat has effectively been sidelined by Washington, which refuses to deal with him on the grounds that he is 'compromised by terror'. Instead, the US is keen to shore up relations with the Palestinians through direct talks with Abu Mazen, whose appointment was a key US condition to proceeding with the peace plan. Powell is scheduled to meet Mazen on the second day of his visit to the region, which is due to start on 10 May.

Israel hopes that Powell will put pressure on the Palestinians to take real steps against militant groups in the same way that he did during his visit to Syria in early May, when he pressed Damascus to cease its support of hardline Palestinian parties with offices in Syria.

Palestinians meanwhile want Powell to press Israel to start moving on its side of the roadmap agreement, including the withdrawal of troops from areas occupied since the start of the intifada and the dismantling of illegal settlements in the West Bank and Gaza Strip. However, with Sharon due to visit Washington at the end of the month, many are sceptical that the Israeli premier will delay implementing the deal until he has pressed US President Bush to allow changes in the supposedly non-negotiable plan.