CAIRO, AUG 17: As Israeli and Palestinian intelligence officials get ready to talk about cooperation tomorrow, Yasser Arafat's government today said it will shun products made by the Jewish state, a move which it believes will hit the Israeli economy.

Israel, however, feels the step will hurt the Palestinians more.

The move by Arafat's Cabinet follows Israel's refusal to lift the closure of West Bank and Gaza making it impossible for tens of thousands of Palestinians from attending work in Israel.

It is not known what goods are covered under the embargo but sources said it could start with soft drinks and chocolates.

Israel has also refused to pay tax revenues to the Palestinians amounting to over $ 40 million demanding a strong crackdown on terrorists by Arafat.

Israeli Premier Benjamin Netanyahu closed the Palestinians controlled areas after last month's twin bomb attacks in Jerusalem which killed 16 people.

``We are going to study what to do and how to face this collective punishment,'' Arafat had said before declaring a partial boycott of Israeli goods in response to Israeli sanctions.

Israeli officials termed the boycott move as ``hostile'' saying it would harm Palestinians instead of Israel.

Meanwhile, Egyptian President Hosni Mubarak said the American administration was pressuring the Palestinians, and urged Washington to take a similar stand with israel too.

Mubarak told a local daily over the weekend here, ``everybody is pressuring (Palestinian leader Yasser) Arafat, but pressure from one side does not solve the problem.''

``If Arafat goes, terrible problems will erupt between the Palestinian organisations,'' he added.

US Secretary of State Madeline Albright has said she would visit the Middle East soon when she saw results on security and a ``100 per cent effort'' from Arafat to crack down on militants.

Arafat, said yesterday that he would not bow to Israeli demands to clamp down on militants and called for ``national unity'' talks with all Palestinian groups.

US mediator Dennis Ross during his peace shuttle last week to the region said that Albright will bring with her a major US political initiative to get the peace process back on tracks.

Saudi Gazatte said in its editorial that Netanyahu's objectives are clear even though he tried to hide his real intentions behind all sorts of devious rhetoric.

``The conflict between him and the Palestinian National Authority is that he wants the latter to do his dirty work. If the administration of Arafat does not crack down on Palestinians, Netanyahu will continue to create situations in which the Palestinians will react violently,'' it said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.