Jerusalem - Mr Yasser Arafat has accepted a proposal that Abu Dis, a West Bank town bordering Jerusalem, could serve as the capital of a future Palestinian state, the Haaretz newspaper said yesterday.
In a meeting with US visitors, Mr Arafat also agreed that under a final peace agreement, Israel could annex major blocs of Jewish settlements in the West Bank in exchange for permitting the creation of a Palestinians state in the rest of the West Bank and Gaza Strip, Haaretz said.
The paper said Mr Arafat made the comments in a weekend meeting with members of the US-based think tank, the Council on Foreign Relations, in the West Bank town of Ramallah.