Aides to both Palestinian leader Yasser Arafat and his prime minister-designate, Mahmoud Abbas, met in an all-night session that ended early Monday morning with no agreement on the formation of a new Palestinian government. Failure to resolve the dispute between the two men could scuttle plans to re-launch Middle East peace efforts.

A leading Israeli newspaper calls it "Brinksmanship in Ramallah," referring to the bitter dispute between Mr. Arafat and his long-time colleague and now prime minister-designate, Mahmoud Abbas.

Tensions soared on Saturday, when Mr. Abbas, also known as Abu Mazen, was said to have stormed out of a meeting with Mr. Arafat, when the Palestinian leader again refused to support Abu Mazen's list of Cabinet appointments.

At issue is Abu Mazen's insistence on selecting Mohammed Dahlan as chief of security. Mr. Arafat wants to maintain his current security chief, Hanni al-Hassan, in the job.

Abu Mazen says he will not budge on the issue, and some negotiators say he seems prepared to refuse the job of prime minister if he cannot prevail.

Yasser Arafat also seems unwilling to budge, but his aides say he is a master of such brinksmanship negotiations and could give in at the last minute.

Abu Mazen has until Wednesday to present his new government to the Palestinian legislature for approval. However, if he does not finish naming his cabinet by Tuesday night, there will not be enough time for the lawmakers to travel to the West Bank city of Ramallah for the session.

The issue over who is to serve as head of security is an important one. Mohammed Dahlan is a former security chief in Gaza, and has said he is confident he could rein in Palestinian militants and thus rein in attacks against Israel.

Hani al-Hassan is currently in charge of security, but during his short tenure as interior minister, he has not succeeded in controlling the militants. However, he is a long-time Arafat loyalist and someone the Palestinian leader obviously feels more comfortable with.

Analysts are quick to point out the dispute is about more than just personalities. Abu Mazen has said repeatedly he will not accept the job of prime minister if he cannot act independently. He has to prove his independence if Israel and the international community are to have any confidence in him as a potential partner for peace negotiations.

The United States has already said it will not issue its so-called roadmap for peace until Abu Mazen and his new Cabinet are sworn in.

For Yasser Arafat, it's a matter of power and prestige. If Abu Mazen acts too independently, Mr. Arafat fears he will lose his grip on power and Israel and the United States will have succeeded in pushing him aside.