The Bush administration says it is still not satisfied with efforts by Palestinian leader Yasser Arafat to crackdown on terrorism and end violence in the region.

Administration officials say they acknowledge that Mr. Arafat has arrested a top official implicated in smuggling a ship-load of Iranian arms, which was intercepted by Israel last month. But they say in past terrorist suspects have been freed quickly and that they are waiting for proof Mr. Arafat is ready to wage a long-term war against terrorism.

On Monday Mr. Bush told reporters he was disappointed with the weapons smuggling affair because he was led to believe that Mr. Arafat was willing to join the fight against terrorism.

Mr. Bush spoke after a telephone conversation with Egyptian President Hosni Mubarak, who is cautioning the United States not to back away from Mr. Arafat or efforts to mediate an Israeli-Palestinian ceasefire.

President Bush said he told Mr. Mubarak that ridding the area of terrorism will make peace and stability more likely.

The European Union also called on Mr. Arafat to crackdown on terrorist networks and urged Israel to recognize the Palestinian leader as a legitimate negotiating partner.

Spanish Foreign Minister Josep Pique, whose country currently holds the rotating EU presidency, read a statement adopted by all 15 EU members at a meeting in Brussels.

Mr. Pique said Israel needs the Palestinian Authority and its elected president, Yasser Arafat, as a partner for negotiations -- in order to eradicate terrorism and to work toward peace.

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