RAMALLAH, West Bank - Palestinian President Mahmoud Abbas unveiled a $1.75 million mausoleum for Yasser Arafat in a pomp-filled ceremony in Ramallah.

The mausoleum, made of glass and beige Jerusalem stone, is surrounded on three sides by water, and a piece of rail track is entombed underneath Arafat's grave.

Officials said the water and piece of track are meant to symbolize the temporary nature of the grave, with Palestinians planning to rebury their leader one day in Jerusalem, their hoped-for capital.

Arafat died Nov. 11, 2004 in a French military hospital and was buried on the grounds of his West Bank headquarters, now used by Abbas. The mausoleum measures 11 by 11 metres to mark the day of his death.

A mosque was built next to the tomb, and an Arafat museum is to open next year.

During the ceremony, Abbas laid a wreath in the colours of the Palestinian flag on the tombstone and honoured his one-time rival with a moment of silence.

In a brief speech Abbas pledged to reclaim part of Jerusalem for his people. The fate of the city, claimed by both Israel and the Palestinians as a capital, is one of the most explosives issues in peace talks, expected to resume after a U.S.-hosted Mideast conference in Annapolis, Maryland, later this month.

"We will continue on the path of the martyred President Yasser Arafat to be reburied in Jerusalem, which he loved ... Jerusalem, which he tried to make, and which all our people are trying to make, the capital of the Palestinian state,'' Abbas said.

In another reference to Jerusalem, the tower of the mosque next to the mausoleum is topped by a laser light pointing to the city, just a few kilometres away, said Mohammed Ishtayeh, head of the Palestinian Economic Council for Development and Reconstruction, which built the site.

Drawing on the legacy of the charismatic Arafat can give a boost to Abbas as he heads to the Annapolis conference, expected to begin Nov. 26.

The sombre Abbas does not enjoy the wild popularity of Arafat. Abbas also faces a stiff challenge from the Islamic militant Hamas which seized control of Gaza by force in June, and claims he does not have the mandate to negotiate for the Palestinians.

In Saturday's speech, Abbas drew on the Palestinians' strong emotional ties to Arafat.

"We are continuing the path, continuing the pledge, to establish an independent Palestinian state, with Jerusalem as its capital, God willing,'' he said.

On Sunday, the third anniversary of Arafat's death, a large rally is to be held at the West Bank compound, followed by a similar gathering Monday in Gaza.