Authorities arrested two men accused of anti-U.S. terror plot. Central Bank retracted decision to freeze accounts of Hamas after angry reactions, including from parliament, but freeze may be reinstated. King Abdullah met U.S. President George W. Bush at Camp David; promised democratic reforms.

Israeli jets attacked suspected Hizbollah gun position in southern Lebanon on 3 September. Raid was first since 10 August, when shells fired by Hizbollah killed one Israeli and wounded five others, breaking period of calm along border. Incident between Lebanese army and Hizbollah guerrillas left one guerrilla dead after troops intervened in dispute between Hizbollah and rival Shiite party. Government on defensive after ordering banks to reveal accounts of Hamas members whose assets U.S. wants frozen. Prisoner swap between Hizbollah and Israel appears likely.

129 army officers went on trial for June coup attempt in which 15 people were killed.

In local elections, Islamists of Morocco's Justice and Development Party fielded candidates in only half its stronghold districts; strategy apparently due to fear of public backlash against rapid rise to power of Islamist party. Elsewhere, 27 convicted in connection with May Casablanca bombings.

Security crackdown continues; 200 suspected Islamist militants have been arrested since May. Four killed in gunfight with radicals allegedly planning terror attack. Authorities focusing on blocking flow of cash to terrorist groups amid U.S. criticism of Saudi aid to Hamas. Meanwhile, last of U.S. troops left Saudi Arabia earlier in month, bringing end to 13-year presence. Saudis deny newspaper report that Kingdom considering acquiring nuclear weapons.

Washington renewed demands for better cooperation from Syria in war on terror. U.S. says Syria supporting terrorists, pursuing WMD, and allowing anti-Coalition fighters to cross into Iraq. Syria denied allegations it has been operating spy ring at Guantanamo Bay.

Morocco’s King Mohammed VI reiterated commitment to cooperating with UN over Western Sahara. Polisario Front released 243 Moroccan POW’s held in south- western Algeria. UN Security Council repeated its call to free 900 remaining detainees in compliance with international humanitarian law.

Government continues to walk fine line between supporting U.S. in war on terror and appeasing largely anti- American populace. Authorities handed over to Saudi Arabia suspected al Qaeda member thought to have had role in May Riyadh bombings.

Following death of UNITA leader Jonas Savimbi in February 2002, UNITA has demobilised but most of its ex- combatants yet to be reintegrated into civilian life. National elections planned for 2004 or 2005. Millions displaced during war still not resettled.

President Ndayizeye held his second face-to-face talks with leader of the country’s biggest rebel group, CNDD-FDD, in South Africa. Talks discussed proposals to share government, military and parliamentary posts and comply with last year’s largely ignored ceasefire agreement. The second largest rebel group, FNL, still refuses to join talks with Government. Fighting between army and FNL in north-western Burundi caused more than 21,000 people to flee.