Blair patently eloquent about peace 'possibility'

JERUSALEM - Setting out with optimism, former British Prime Minister Tony Blair urged Israel and the Palestinians yesterday to seize on a "sense of possibility," and he made plans to set up a permanent office in the region to pursue his mission of laying the groundwork for Mideast peace.

More violence underscored Blair's difficulties - an outbreak of factional clashes between rival Palestinians in the West Bank and an Israeli air raid against Palestinian extremists in the Gaza Strip.

Blair told the Palestinians his first trip as special envoy for the so-called Middle East Quartet - the United States, the European Union, the United Nations and Russia - was intended to gather input for formulating his strategy.

He had a working dinner with Israeli Prime Minister Ehud Olmert last night and was due to leave early today.

Blair, who visited the region several times during his decade as prime minister, was to return in early September and hoped to have the office in place in Jerusalem for a full-time staff. His spokesman said Blair planned to spend about one week every month in the area.

"I think there is a sense of possibility," Blair said after meeting Israeli President Shimon Peres, "but whether that sense of possibility can be translated into something, that is something that needs to be worked at and thought about over time."

Peres, speaking at Blair's side, added a note of caution: "I feel there is a serious window of opportunity to advance peace. I don't know the duration of this opportunity; I am afraid it is not too long."

Blair has been asked by the Quartet to prepare the foundations for a stable, economically strong West Bank government that could lead the Palestinians into statehood, but to leave the hard political issues at the core of the Arab-Israeli conflict to other negotiators.

But Palestinian leaders told him that politics could not easily be separated from economics, according to officials speaking on condition of anonymity because they were not authorized to brief the media. Palestinian Authority President Mahmoud Abbas and his pro-Western prime minister, Salam Fayyad, urged Blair to push a political agenda that would help restart direct talks with Israel on the core issues.

At a 90-minute lunch with Blair, Palestinian business leaders told him that hundreds of Israeli checkpoints in the West Bank had stifled the economy and asked for his help in removing them.

They also discussed the importance of developing Gaza's economy, despite Hamas' control over the area. Hamas took over Gaza last month during five days of factional fighting, prompting Abbas to install his pro-Western government in the West Bank.

"Blair recognizes and understands that Gaza can't be separated," businessman Samir Huleileh said. "He understands that the Gaza economy is important and vital for our economy, the West Bank economy."

As Blair visited the Palestinian government in Ramallah, riots erupted on the campus of An Najah University in Nablus, about 30 miles away. A Palestinian student was shot and seriously wounded during a brawl among 15,000 supporters of Abbas' Fatah and the rival Hamas movement. It was the worst clash between the two groups in the West Bank since the violent fall of Gaza to Hamas last month.

Separately, no one was injured in the Israeli air raid in Gaza that hit the top floor of a three-story building. The military declined to comment.

The Bush administration has taken action against an Iranian-based foundation, including

its U.S. branch, for allegedly providing support to the group Hezbollah.

The action was directed at the Martyrs Foundation and what the U.S. identified as its fund-raising office, the Goodwill Charitable Organization of Dearborn, Mich.

FBI agents used

warrants to remove boxes from the Goodwill Charitable Organization's office yesterday.

The government action means any bank accounts or other financial assets found

in the United States that belong to those organizations or people linked to them must

be frozen. Americans also are prohibited

from doing business with them.