As Palestinians marked the third anniversary of their infitada, or uprising, President Yasser Arafat's Fatah party put together a new cabinet, which replaces a U.S.-backed security chief with an Arafat loyalist. The move is seen as a setback for the so-called road map to peace.
The new cabinet will be headed by the prime minister-designate, Ahmed Qureia. He replaces Mahmoud Abbas, who resigned earlier this month, after losing a power struggle with Mr. Arafat over the control of the security forces.
Mohammed Dahlan, the man Mr. Abbas had selected as his security chief, has been ousted from the new cabinet by Mr. Arafat's Fatah faction. He is replaced by Mr. Arafat's long-time ally, a Palestinian police force commander, Major-General Nasser Yousef.
Mr. Dahlan enjoyed the support of the U.S. administration, even though he had refrained from dismantling and disarming Palestinian militia groups.
Observers believe it is even less likely that Mr. Yousef will move against these organizations, because of his loyalty to Mr. Arafat.
Also, the way the new cabinet is formed, Mr. Arafat will continue to have overriding power over the Palestinian Authority, including security.
The Cabinet is expected to be formally approved at a meeting of the Palestinian Legislative Council later this week.
Israeli Prime Minister Ariel Sharon said on Friday he had not ruled out the possibility of working with Mr. Qureia. Mr. Sharon, who has negotiated with Mr. Qureia in the past, said the success of any new Palestinian government would depend on its ability to stop Palestinian armed groups carrying out terror attacks against Israel.
Mr. Sharon is also demanding that these groups be disbanded.
Mr. Arafat has said that while he is interested in negotiating a possible cease-fire with Israel, he has no intention of ever dismantling Palestinian militant groups.
Several of Mr. Arafat's other supporters have been selected for the new Cabinet, including Yasser Abbed Rabbo, who will be the information minister; and Saeb Erekat, who retains responsibility for negotiations with Israel.
Two Palestinian ministers who enjoy international support, Foreign Minister Nabil Shaath and Finance Minister Salam Fayad, will continue to serve in the same portfolios.