Israeli Prime Minister Ariel Sharon phoned Mahmoud Abbas on Tuesday to congratulate him on his election as Palestinian president and offer co-operation, the highest-level contact between the sides in nearly four years. But Palestinian militants resumed rocket and mortar fire at Jewish settlements in Gaza, signalling tough challenges ahead for the moderate Abbas and his call for a truce to help revive peace talks aimed at creating a Palestinian state.
Abbas's predecessor Yasser Arafat last spoke to Sharon by telephone in February 2001 to congratulate him on his election victory. With a Palestinian uprising raging, Sharon subsequently boycotted Arafat, calling him an "arch-terrorist".
Sharon's office said he spoke with Abbas for 10 minutes and welcomed his landslide election victory on a platform of non-violence. "He wished him success and the two agreed they would talk again soon," it said in a statement.
A senior government official quote Sharon as telling Abbas: "I am offering you our co-operation." He said Sharon and Abbas spoke about a meeting in general terms but no date was set.
Earlier Sharon told his cabinet he would seek co-ordination on security matters based on a Palestinian effort to "stop terrorism" against Israelis and added: "I believe there will be a meeting between us soon".
Maher Shalabi, an adviser to Abbas, said the two leaders talked about "ways to revive the peace process and about a meeting, which will be set up in the next few days".
A senior Israeli security source said Sharon was ready to turn over most occupied territory to Palestinian policing - meaning a halt to army raids and removal of checkpoints - if Abbas demonstrated "a 100 percent effort" to subdue militants.
But while Abbas wants a cease-fire, he has rejected Israeli demands to crush the militants, calling them "freedom fighters" whom he wants to integrate into the Palestinian mainstream.
Aides say Abbas would gain more leverage over militants if Israel stopped expanding settlements in the West Bank and proved it was ready to talk about a viable Palestinian state, not just security co-ordination to protect Israelis.
MILITANTS DEFY ABBAS:
Abbas took 62.3 percent of the ballot in Sunday's election of a successor to Arafat, patriarch of the Palestinians' statehood struggle who died in November. But powerful Islamists boycotted the vote and refused to suspend attacks on Israel.
They wasted no time subjecting the new Palestinian president to his first test, firing seven rockets and mortar bombs into Jewish enclaves in southern Gaza and one rocket into an Israeli border town, causing damage but no casualties.
An Israeli died on Tuesday of wounds suffered in a rocket volley into a north Gaza settlement last week.
The resurgence of rocket fire after an election lull and the threat of more Israeli army counter-strikes could, if not swiftly checked, stall the post-Arafat diplomatic momentum.
Abbas wants to call off a four-year-old uprising waged by militant factions and negotiate for a state in all of the occupied West Bank and Gaza with East Jerusalem as its capital.
Israeli Defence Minister Shaul Mofaz said Abbas's election was a Middle East watershed but Israel's planned pullout from Gaza, seen as a key peace step, would not be done "under fire".
Hamas militants, who want not only to oust Israel from the territories but destroy the Jewish state too, vowed to fight on.
Hamas spokesman Sami Abu Zuhri said the group sought "common understandings" with Abbas but added: "Resistance to occupation will continue, including shelling attacks. This is natural."
A halt to Palestinian violence and a freeze on settlement building are twin preconditions for a "road map" peace process US-led mediators hope to revive with Abbas in power.
But analysts cautioned against undue optimism.
Neither Palestinians nor Israelis have shown signs of compromise on fundamental disputes behind generations of conflict - borders, the future status of holy Jerusalem and redress for millions of Palestinian refugees.
Bush has assured Israel it will not have to cede West Bank settlement blocs, which Palestinians fear could undermine Abbas.
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