Israel Releases Jailed Palestinian Leader : Mideast: Fistfights break out among rival demonstrators as Faisal Husseini leaves courthouse.

Israeli police freed Palestinian leader Faisal Husseini from jail Monday, removing one of several roadblocks in the way of peace talks between Israel and Palestinians.

Husseini, 49, who had been held four days for questioning on charges that he paid for uniforms used by Palestinian rebels, said he was arrested to block the peace talks.

The arrest was criticized by the Bush Administration, Palestinians and some Israelis. Husseini is considered a likely candidate to take part in the talks, which are being promoted by Washington.

As Husseini left a courthouse in central Jerusalem, fistfights broke out between rival demonstrators. Rightist Israelis want Husseini locked up or deported because of his links to the Palestine Liberation Organization.

Husseini said at a news conference: “I think that my arrest was political, and the result was that they could not prove anything against me. Everything they did was intended to stop moves for peace. I am not in prison, and I am working and will work for peace.”

However, a police spokesman said Husseini is still under investigation.

Husseini’s arrest was a diversion in the frenetic Israeli-Palestinian activity focused on peace talks.

Secretary of State James A. Baker III has invited officials from Israel and Egypt to meet and agree on a Palestinian delegation to a peace panel. Israeli Prime Minister Yitzhak Shamir is facing a revolt in his Likud Party over the possible meeting. Hawkish Cabinet ministers, led by Trade Minister Ariel Sharon, believe that such talks will mean the loss of the Israeli-occupied West Bank and Gaza Strip to a Palestinian state.

Shamir threatened Monday to resign if a party meeting next month censures his foreign policy.

“It is very clear that if the (party’s) Central Committee doesn’t support me, I cannot stand at the head of Likud and not at the head of the country,” he said in a radio interview.

Shamir rejects participation of the PLO in peace talks and is pressing Washington to bar the group. He also wants to bar Palestinian residents of East Jerusalem--where Husseini lives--from taking part and to limit the subject of the talks to his plan to have elections in the West Bank and Gaza Strip.

In Shamir’s view, letting Jerusalem Arabs take part would tend to undermine Israel’s control of its capital city. He also believes that opening the agenda to other subjects would let the Palestinians bring up the issue of statehood, which he resolutely opposes.

Later this week, Finance Minister Shimon Peres, who heads the center-left Labor Party, is scheduled to visit Cairo and discuss peace proposals. Labor is considered more agreeable to a role for the PLO and to giving up some land in return for peace.

Palestinian activists, meanwhile, have been holding quiet meetings to consider possible participants in peace talks. People who have been mentioned, beside Husseini, include Elias Freij, the mayor of Bethlehem; Radwan abu Ayash, a Jerusalem journalist affiliated with the PLO; Mustafa Natsche, a lawyer from the West Bank town of Hebron, and Said Kanaan, a Nablus businessman and cousin of a PLO official in Cairo.

The names of two men have surfaced to represent Palestinians from outside the West Bank and Gaza Strip: Mohammed Milhem, former mayor of Halhoul, a West Bank community, and Akram Henayah, a journalist. Both have been deported from Israel and are living in exile.

The PLO is demanding that outsiders take part. It also wants the agenda to include independence for the occupied lands.