OCCUPIED JERUSALEM, 3 June — The European Union and the United States kept up diplomatic efforts yesterday to revive the Middle East peace process, but Israeli forces still occupied the Palestinian city of Nablus, with Defense Minister Binyamin Ben-Eliezer warning the situation was “explosive.”

EU foreign policy chief Javier Solana said after a meeting with Israeli Foreign Minister Shimon Peres that a regional conference to tackle the 20-month-old crisis should be held “as soon as possible,” preferably in late July. Peres stressed in his talks that Israel had no intention of permanently reoccupying Palestinian areas, as the army sat tight in Nablus for a third day.

Israeli forces that have been occupying Nablus in the West Bank since Friday dynamited the house of an activist leader assassinated last month by the Israeli Army. Troops also arrested overnight four female Nablus university students, members of Palestinian President Yasser Arafat’s Fatah movement who were accused of being involved in a plan to launch more attacks in the coming days, Israeli public radio said.

Ben-Eliezer warned top US Middle East envoy William Burns that the situation in the region is far more dangerous than the relative calm of the past week suggests. “The situation in the region is serious and much more explosive than it appears since there are constantly warnings and very hard attacks planned by Palestinian terrorist organizations,” Ben-Eliezer said.

Both Burns and Egyptian presidential adviser Osama Al-Baz told the hawkish Israeli Prime Minister Ariel Sharon he would have to work with Arafat, the elected Palestinian leader, despite Sharon’s insistence that his Palestinian rival is “irrelevant to the peace process.”

Meanwhile, Egyptian President Hosni Mubarak was set to hold talks in Cairo with US Central Intelligence Agency chief George Tenet, officials said. A US official said Tenet’s mission was to help Palestinians reorganize their security services, a scheme that was reportedly proposed by Egypt. He is expected in Israel today.

In another development, Arafat said upcoming reforms of his administration will be a “radical” move in an interview published yesterday in the Greek daily Vradyni. “It will be radical. All the ministries will be changed,” Arafat said in the interview conducted May 25, four days after he signed the de facto constitution which had been adopted by parliament five years before. He said the reshuffle would take place within a maximum of 30 days.