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PLO Chairman Yasser Arafat said Wednesday the Palestinian leadership explicitly recognizes Israel's right to exist and condemns terrorism.

The Palestine Liberation Organization chief issued a statement jointly with a group of American Jews to explain the proclamation of an independent state by the Palestine National Council in Algeria Nov. 15.The Palestinian parliament-in-exile meeting last month released a document accepting U.N. resolutions recognizing the right of all states in the region to exist and renouncing terrorism.

The United States, which refuses to deal with the PLO, said the Algiers declarations were not explicit enough. It denied Arafat a visa to address the U.N. General Assembly, citing what it said were PLO links to terrorism.

The statement issued by Arafat and the five American Jews in Stockholm Wednesday said the PNC "established the independent state of Palestine and accepted the existence of Israel as a state in the region."

The joint Stockholm document also declared the Palestinian parliament's "rejection and condemnation of terrorism in all its forms, including state terrorism."

President Reagan, asked about Arafat's statement before he left Washington to meet with Soviet leader Mikhail Gorbachev, said, "We haven't had time to review what it is that he said there specifically; we look forward to that."

Israeli Foreign Minister Shimon Peres, speaking on Israel Television, criticized the statement and asked why Arafat continued to issue documents rather thanmaking a public announcement himself.

"I am astonished by the show. Why doesn't Arafat say it himself?"

At a news conference following release of the joint statement Wednesday, Arafat said, "The PNC accepted two states - a Palestinian state and a Jewish state, in practice Israel. Is that clear?"

Arafat said the 11-month-old Palestinian uprising in the Israeli-occupied West Bank and Gaza Strip "will continue until there is a Palestinian state. Anyone facing occupation has the right to resist."

Swedish Foreign Minister Sten Andersson said at a news conference that Arafat's statement was "a breakthrough in the peace process. The PLO has now explicitly accepted Israel as a state.

Rita Hauser, chairwoman of the group of American Jews who met with Arafat in Stockholm, said after the declaration was issued that she was satisfied the PLO had now fully clarified its position regarding Israel.

"There is no question that this document means full recognition of the existence of Israel in the region," she said. "The PLO has accepted the existence of Israel and renounced terrorism. I have strong reasons to hope that the U.S. government will now speak with the Palestinians."

Arafat arrived in Sweden Tuesday at the invitation of the Swedish prime minister and foreign minister amid a glare of publicity and an official welcome normally reserved for heads of government.

But the meeting between Arafat and the American Jews was roundly criticized by Israel and major Jewish-American groups.