Israeli Foreign Affairs Minister Shimon Peres and the PLO's chief negotiator Nabil Shaath began talks over the next stage of the peace process in Alexandria on 17 August amid mounting Israeli concerns over security.

The talks cover the transfer of civilian powers to the Palestine National Authority (PNA) and the extension of the self-rule area. On 18 August, Israel announced it would transfer education by 1 September. Also under discussion was the procedures for the Palestinian elections which are expected to take place in mid-December, five months later than outlined in the declaration of principles (MEED 24:9:93, pages 26-27).

Nabil Shaath said before the Alexandria meeting that there was a 'cold peace' between the two sides. He accused Israel of using the hesitancy of donors to commit funds to self rule as an excuse for delaying the handover of powers to the PNA.

Talks have been overshadowed by the 14 August killing of the 18-year- old settler Ron Shoval - the first killing of an Israeli civilian in Gaza since the PNA took control. It has prompted Israeli criticism of the Palestinians' ability to maintain security in the self-rule areas.

'It is inconceivable we will continue the (peace) process without seeing on the part of the Palestinian authority a serious effort to deal with those terrorist elements,' Israeli Prime Minister Yitzhak Rabin said on 15 August at the site of the killing.

Palestinian police arrested 40 activists of the Islamist group Hamas the day after the killing, releasing most of them by 16 August. The Hamas leadership claimed responsibility for the attack and said, in a statement sent to Reuters, that the PNA by making the arrests had 'submitted to Zionist blackmail'.

The US Secretary of State Warren Christopher presented a more upbeat picture of the Syrian-Israel track of the peace process in an interview published by the daily New York Times on 16 August. He said Rabin and Syria's President Asad were two of the toughest and most experienced negotiators in the Middle East, which is why progress has been slow until now.

'Up to this last trip there was a psychological barrier,' he said. 'I believe they've broken through, discussing concrete elements - the nature of peace, withdrawal, security.' But he said there were still big gaps between the two sides. Christopher is expected to return to the region in September.