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Yasser Arafat, in the past denounced as a terrorist, was warmly welcomed at the White House Wednesday for the first time as a national leader. President Clinton praised him for leading the Palestine National Council to renounce its decades-old call for the destruction of Israel.

"Under difficult circumstances, he kept that commitment," Clinton said.With the next phase of Palestinian-Israeli talks due to open Sunday, Clinton said he wants to avoid "getting in the middle" of negotiations over Palestinian statehood.

"My position from the day I got here is still the same position," Clinton said. "Those matters are going to have to be worked out by the parties in the region."

Arafat wore the traditional Arab head scarf, but his cheeks were uncharacteristically clean-shaven for his visit to the Oval Office.

Both Clinton and Arafat said their talks would focus on the next steps in the peace process.

"It is a very important opportunity to speak about how to push forward, how to strengthen more and more the peace process," Arafat said. He credited Clinton with getting the process started.

"We now have to work hard on where we go from here," the president said. "I want to talk to him about what we can do to improve the welfare of the Palestinian people and what we can do to continue to work together toward the security of all the people in the region."

Arafat arrived in a sleek black limousine to meet Clinton, the leader of a country that for decades would have nothing to do with his guerrilla organization.

Step by remarkable step, Arafat has made the transition from terrorist to statesman, a passage symbolized when the Palestine Na-tion-al Council voted on April 24 to renounce its decades-old call for the destruction of Israel.

The Arab leader's other visits to the White House were occasions of ceremony, the signing of historic peace accords with Israel, including the now-famous September 1993 handshake with the late Israeli Prime Minister Yitzhak Rabin.

Wednesday's meeting is a business session. It is intended to set the stage for successful negotiations when Israel and Arafat's Palestinian Authority open a final phase of talks about the future of the West Bank and Gaza this month.

But Clinton's decision to receive Arafat one-on-one was a clear expression of thanks for his leadership in guiding the PLO to give up its goal of destroying Israel.

"It is an opportunity to express our encouragement and appreciation for that step," said a U.S. official who briefed reporters at the White House.

The Clinton administration is taking more concrete steps as well.

The United States has pledged a half billion dollars over five years to help the Palestinian Authority build the underpinnings of a democratic society. Some $175 million has been delivered so far, said the official who spoke on condition of anonymity.

Clinton's meeting with Arafat followed by hours a visit to the White House by Israel's new prime minister, Shimon Peres, where he and Clinton signed a joint declaration on terrorism, affirming U.S.-Israeli agreements on sharing information and experts and extraditing known terrorists.

Clinton and Peres also agreed to explore putting the two countries' longtime military relationship on a more formal basis.

Arafat scheduled a series of Washington appearances, including a meeting with Peres at a Washington hotel, a speech at the National press club, a meeting with World Bank President James Wolfensohn and a "town hall" session with Arab Americans.

Peres and Arafat's private hotel meeting lasted about 15 minutes Tuesday night. They discussed Israel's partial closure of the West Bank and Gaza boundaries as a means of screening out terrorists, the revision of the PLO charter last week to delete references to armed struggle to eradicate Israel and the future of Hebron.

Peres has promised to redeploy Israeli troops in the West Bank city so they protect only Jewish settlements and are no longer mixed in with Arab residents.

This is Arafat's first trip to Washington since his election in January as president of the Palestinian Authority.

At Arafat's insistence, the Palestine National Council, for the past three decades the parliament-in-exile of the Palestinian movement, voted to revoke clauses in its 32-year-old charter prescribing an armed struggle to destroy the Jewish state.

Israel refused even to talk with Arafat's Palestine Liberation Organization, which it considered a terrorist organization, until early this decade. The United States followed suit.