For the second time in 16 months, the deadline for an independent state has been postponed by the Palestinian leadership. In a two-day closed meeting, the Palestinian Central Council (PCC) agreed to uphold Palestinian leader Yasser Arafat's decision to delay the deadline for statehood, which was due to expire on 13 September.

The US led applause for the move, which was welcomed by several of the Palestinians' international allies including Russia and Jordan. Israeli reaction was mixed, with acting Foreign Affairs Minister Shlomo Ben Ami describing the delay as a positive step. 'But it is not a gesture that needs to be compensated, ' he added.

Radical Palestinian groups and many Arab states condemned the delay, and Syrian state radio described it as part of 'the endless Israeli demands for Palestinian concessions'. Syria has called for an urgent Arab summit to reinforce the Arab commitment to Jerusalem.

In his closing address, PCC chairman Salim Zanoun said that the Palestinians would review the situation on 15 November and declare a state then, if the time was right. In what is considered by many as a conciliatory gesture to frustrated Palestinians living in the West Bank and Gaza Strip, the PCC announced preparations for statehood, including plans to apply for UN membership and holding presidential, parliamentary and municipal elections.

Israeli Prime Minister Ehud Barak, who had initially hoped to clinch a deal by 13 September, is now looking to forge an agreement in October. If he fails, his minority government will face a difficult battle should parliament force an early election when it reconvenes at the end of October.

Barak, however, is not exuding optimism.

He told Israel Radio on 12 September that he believed the chances of concluding a successful deal were 50-50, 'perhaps even a little less'. Justice Minister Yossi Beilin, one of the architects of the 1993 Oslo peace accord, was more hopeful. 'I think that now we are on the verge of an agreement on the final status, ' he told Reuters. 'I hope Palestinians and Israelis will be strong enough to get to the moment of truth, to the permanent solution, which is around the corner.'