A senior Palestinian official says Mr Yasser Arafat's government is considering declaring a state in the West Bank, Gaza Strip and east Jerusalem if Israel tries to impose a boundary on the Palestinians.
The possibility of the declaration of a state was raised at a meeting of Palestinian leaders over the weekend, said Mr Yasser Abed Rabbo, who is close to Mr Arafat.
Mr Rabbo said many of those present supported the idea but did not say whether Mr Arafat favoured it. However, other participants said the proposal was only raised informally and was not part of the agenda.
He insisted that declaring independence - which would mean walking away from the US-backed "road map" peace plan - was a serious option. "We are not discussing this as an academic exercise," he said.
Mr Zalman Shoval, a senior aide to Israeli Prime Minister Mr Ariel Sharon, warned Israel could annex disputed territories in response.
A statehood declaration would come as a counter-move to Mr Sharon's plan to "disengage" from the Palestinians, in the event efforts fail to revive peace talks in coming months. Such Palestinian action would pre-empt final status talks, Mr Shoval said.
Mr Sharon's disengagement plan was not meant to establish final borders, which would be decided together with the Palestinians, Mr Shoval said.
Mr Sharon has proposed redeploying Israeli troops, dismantling some settlements and imposing a boundary on the Palestinians. In such an arrangement, the Palestinians would end up with far less territory than they seek for their state.
AP