Jerusalem ? Prime Minister Ariel Sharon praised Israel’s efforts to fight terrorism Sunday, hours after Israeli forces captured two armed Palestinians approaching a Jewish settlement in the Gaza Strip.

Sharon credited his outgoing military commander, Lt. Gen. Shaul Mofaz, with exerting “a great effort in confronting terrorism,” especially in the past two years of steady Israeli-Palestinian violence.

“We have had some victories, but there still remain deep problems,” Sharon said at a weekly Cabinet meeting.

Mofaz, whom Sharon has rebuked many times for treading on politically sensitive matters, is stepping down after four years as army chief of general staff.

Also on Sunday, Egyptian intelligence chief Omar Suleiman met with Israeli Defense Minister Binyamin Ben-Eliezer and was to speak later Sunday with Sharon and Arafat, part of Arab efforts to push Palestinian Authority reforms. And in Hebron, Palestinian security officers rallied against one of Arafat’s first changes – the firing of the leader of the strongest security service in the West Bank.

Israel’s Cabinet also confirmed Sunday the appointment of Sharon’s foreign policy adviser, Daniel Ayalon, as ambassador to the United States, Israel’s strongest ally. The former ambassador, David Ivry, left his post in mid-April.

In the Gaza Strip, armed Palestinians were approaching the security fence of the Jewish settlement of Alei Sinai when soldiers opened fire and cut off their retreat, Israel Radio reported. The Palestinians returned fire, then the two surrendered.

The army confirmed capturing two of four men spotted near the settlement armed with assault rifles and wearing camouflage.

Suleiman’s visit Sunday was expected to help press ahead with reforms to the Palestinian Authority and its security services.

Arafat has been under Israeli and American pressure to restructure his overlapping security forces and direct them to stop terror attacks against Israel. This past week, Arafat dismissed three senior security leaders, including Jibril Rajoub, head of Preventive Security in the West Bank.

On Saturday, disgruntled security officers rejected Arafat’s choice for a new West Bank security chief, Jenin governor Zuheir al-Manasra. The officers said Manasra was unsuitable because he was not from Preventive Security, the most powerful security branch.

About 300 demonstrators carried banners Sunday in Hebron saying “we support Rajoub” and chanted “Down with al-Manasra.” They were careful to temper their anger, also shouting “Long live Arafat.”

Ahmed Salhoub, a preventive security officer, said he and other officers won’t accept anyone to lead them other than Rajoub.

“He’s been our leader since the first uprising. He built Preventive Security to what it is and Arafat shouldn’t punish him but promote him to a better position for what he has done for the Palestinian people,” Salhoub said. “We are with Arafat and his changing of corrupt people, but we will not accept al-Manasra.”

Rajoub has said he was not seeking another post.

“I might change this position in the future, after the elections,” he said, referring to polls for the Palestinian Authority leadership and for the Palestinian legislature, both scheduled for January 2003.

On Saturday, the Israeli army allowed a delegation of 10 senior officers to enter Arafat’s compound, where the Palestinian is confined by Israeli forces. After a three-hour meeting with Arafat, Col. Ziyad Habalreah told reporters the Palestinian leader had listened sympathetically to the group’s insistence the new commander must come from within.

“I can describe the atmosphere of the meeting as positive,” Habalreah said, adding that Arafat promised to consider their concerns and meet with them again. In the meantime, Habalreah said, it had been agreed the officers would be under the direct authority of the Palestinian Interior Ministry and not al-Manasra.

Arafat had quarreled with Rajoub in recent months, and no reason for the dismissal has been made public. It was not clear whether the move was related to internal wrangling, or if it was part of an effort to restructure the security forces.

Rajoub, who has said that despite the dismissal he remains loyal to Arafat, has been mentioned as a possible successor to the Palestinian leader and had close ties with Israeli officials before the Mideast violence erupted in September 2000.

However, Israel has consistently criticized the Palestinians for not cracking down on militants carrying out attacks against Israel.

Arafat has been confined to his Ramallah headquarters for most of the past seven months by the Israeli forces, who now control seven of the eight major Palestinian West Bank towns.