NEW YORK, Nov. 6 (JTA) — Despite a daily drumbeat of terror and death in the Middle East, efforts continue to achieve a diplomatic breakthrough. In the past week, for example, Israeli Foreign Minister Shimon Peres and Palestinian Authority President Yasser Arafat met twice, and Peres reportedly presented a peace plan to Prime Minister Ariel Sharon. The timing of the diplomatic push may not be coincidental, coming days before the U.N. General Assembly convenes here on Nov. 10. On Tuesday, the London-based Al-Hayat newspaper reported that Arafat may unilaterally declare a Palestinian state at the General Assembly, believing he will receive wide backing. Peres said he does not know about such plans, but that Arafat would "be taking a huge risk, because it will be a Palestinian state without borders." Just the same, the possibility that Arafat may spring a surprise on Israel could help explain Peres´ urgency in coming up with a peace plan. "We cannot remain without a plan," Peres said, according to the Israeli daily Ha´aretz. "If we don´t take the initiative, they will take the initiative from us." There have been reports for more than a week that Peres was drafting a peace initiative. On Sunday, according to Ha´aretz, he presented it to Sharon. Two days later, Peres told Israel Radio that he wanted to reach an agreement with Sharon on a common plan to present to the Palestinian Authority. According to Ha´aretz, the Peres plan includes the following: A demilitarized Palestinian state will be created, with its borders determined through negotiations; Buffer zones will be created between Israel and the West Bank; The plan would be implemented first in the Gaza Strip, later in the West Bank; The status quo will remain in Jerusalem, including Palestinian control over the Temple Mount. If it becomes impossible to reach agreement on Jerusalem, the issue will be postponed; Palestinian refugees will not return to homes they abandoned in Israel during the 1948 war. An international panel will be created to arrange compensation for Palestinian refugees, as well as for Jewish refugees from Arab countries; There will be no Israeli-Palestinian negotiations until there is a complete cessation of violence, a frequent demand of Sharon. The Peres plan also calls for the United States to guarantee Israel´s final borders, Ha´aretz reported, adding that Israel will seek a defense treaty with the United States to accompany any final peace treaty with the Palestinians. As Sharon studies Peres´ proposals, he knows that his unity government could hang in the balance. Avigdor Lieberman, head of the hawkish National Unity bloc, threatened Tuesday to leave the government if Sharon accepts the Peres plan. On the other hand, Peres is under increasing pressure from his Labor Party to pull out of the government unless Sharon shows he is serious about entering negotiations with the Palestinians. In the meantime, the violence continues. In the bloodiest such incident this week, a Palestinian gunman opened fire Sunday on a bus in the French Hill neighborhood of northern Jerusalem. Two people were killed and some 50 injured when the gunman sprayed the No. 25 Egged bus with fire from an M-16 automatic rifle at the afternoon rush hour. Police identified one of the dead as Shoshana Ben Yishai, a 16-year-old who immigrated to Israel with her parents from Long Island when she was 5 years old. Three Israelis — a border policeman, a soldier and a civilian — shot and killed the gunman. The gunman was a member of Islamic Jihad from the West Bank city of Hebron, Jerusalem Police Chief Mickey Levy said. The attack took place hours after Defense Minister Benjamin Ben- Eliezer said at Israel´s weekly Cabinet meeting that Israeli troops would withdraw from the West Bank city of Kalkilya. Early Monday, Israeli forces indeed withdrew from Kalkilya. The army said it would remain in Israeli-controlled territory nearby "to prevent terror activities launched from" areas under Palestinian control. In its biggest operation in areas under Palestinian control since the two sides signed their first interim peace accords in 1993, Israel took up positions last month in and around the largest Palestinian-controlled cities in the West Bank. Criticized by the United States and other Western nations, the operation was launched to crack down on terrorism after the Oct. 17 assassination of Tourism Minister Rehavam Ze´evi by a Palestinian squad. Israel troops already had withdrawn from Bethlehem and Beit Jalla. On Tuesday, Ben-Eliezer ordered the Israel Defense Force to prepare to withdraw from Ramallah, while maintaining a tight closure around the city. IDF troops remain in Tulkarm and Jenin. On Tuesday, in a signal that Israel would change its anti-terror strategy, Sharon spokesman Ra´anan Gissin said Israel plans to rely less on large-scale military operations and more on "guerrilla warfare" tactics against suspected terrorists. "We´ll rely more on intelligence" and "pinpointed operations," he said. On Monday, three Israelis were wounded when a bomb exploded in an Israeli settlement near the West Bank city of Jenin. One suffered moderate wounds and the other two light injuries in the blast at a factory in Shaked. Islamic Jihad claimed responsibility. Following the bombing, Israeli officials said the attack would delay plans to withdraw troops from Jenin. In other violence, Palestinian gunmen shot and killed an Israeli soldier, Staff Sgt. Raz Mintz, 19, of Haifa last Friday night. The gunmen also lightly wounded another soldier in the drive-by shooting, which occurred at a roadblock north of Beit El. The Al Aksa Brigade, which is affiliated with Arafat´s Fatah movement, claimed responsibility for the attack.