"Arafat -- who continues to finance, initiate, operate and dispatch terrorists -- will not be a partner for negotiations," Sharon's office said in a statement.

It added that Israel will only speak to those Palestinians "who are not involved in terror in any way, shape or form."

In an interview with Israeli Television on Wednesday, Arafat said he would talk with Sharon, who always labels the Palestinian leader as a "terrorist."

"Tonight! We insist on returning to negotiations as soon as possible," said Arafat.

Palestinians voiced fears, however, that a right-wing surge behind Sharon's re-election on Tuesday would lead to an Israeli reoccupation of the Gaza Strip.

Israeli Defense Minister Shaul Mofaz had hinted in Israel Army Radio earlier in the week, that Israel had not ruled out the option.

Palestinian cabinet minister Azzam al-Ahmed said Sharon would exploit a looming US-led war on Iraq to "escalate his aggression against Palestinians, including the reoccupation of Gaza."

But Ahmed Abdel Rahman, an aide to Arafat, said Tuesday's elections crystallized divisions over peace strategy within Israel and predicted that the left-wing could rebound if the conflict dragged on under Sharon's leadership.

(Xinhua News Agency January 31, 2003)