By Dan Williams

BETHLEHEM, West Bank, Dec 6 (Reuters) - Mohammed Salman joined Palestinian President Mahmoud Abbas's polibe hoping to curb crime in his hometown. After Abbas broke with Hamas, Salman knew he might be ordered to crack down on the Islamists too.

But it was not a factional clash that killed Salman. He was shot by undercover Israeli troops on Wednesday in an apparent mix-up that showed mistrust overshadows a bid by Abbas to impose security in the Israeli-occupied West Bank with Israeli cooperation.

Witnesses said Salman, 37, manned a checkpoint in Bethlehem. When a car carrying several menacing-looking men failed to stop on Wednesday, the policeman shot at it, the witnesses said.

"He was doing his job, confronting outlaws," Bethlehem's chief of security, General Ahmed al-Hadar, said on Thursday.

But the car's occupants were Israeli commandos disguised as Arabs. They fired back, killing Salman and wounding his partner.

Israel, whose forces pulled out of West Bank cities in the 1990s but overran them again in 2002 amid fighting, demands Abbas impose order as a condition for progress in peace talks launched at last week's U.S.-sponsored Annapolis conference. Yet handovers have been slow. Israel has objected to some equipment requests by the Palestinians and is reluctant to stop its own army's missions, drawing rebukes from Western monitors.

Israeli officials say caution is warranted because some Palestinian security personnel may be moonlighting as militants. Israel is holding three Palestinian policemen on suspicion they killed a Jewish settler in the West Bank last month.

Palestinians, wary of stop-gap accords with Israel that do not lead to serious statehood talks, see signs of sabotage. Tensions are especially high as Abbas's forces now control only the West Bank after Islamist group Hamas seized Gaza in June.

"Every time we try to put together a security plan, the Israelis do something to knock it back," Hadar said, adding he had been assured by Israeli counterparts earlier this week that they were suspending their raids in Bethlehem.

MISTAKES

Israel said it was investigating Salman's shooting with Palestinian help. It provided a cursory account of the incident.

The commandos, an army spokesman said, were on a mission to arrest a suspected militant in Bethlehem when they came under fire from "gunmen". Only afterward did the Israelis realise they had shot a policeman, the spokesman said.

Salman belonged to a paramilitary unit whose members wear uniforms. An Israeli commando officer involved in undercover operations said they are rarely coordinated in advance with Palestinian security forces out of concern for secrecy.

"Mistakes can happen, but generally these guys don't just shoot for the hell of it. The whole reason we use undercover units is because they are disciplined enough to go in quietly, do the job, and get out without a big mess," the officer said.

There have been high-profile exceptions. In 2000, snipers from the Duvdevan undercover unit killed three of their comrades after mistaking them for militants during a West Bank raid.

An official in Abbas's administration said Palestinian policeman who attack Israel should be seen as an aberration.

Ashraf el-Ajrami, Palestinian minister for prisoner affairs, said the three policemen arrested for the settler's killing "belonged to the security organisations but acted on their own".

"We want to put an end to this phenomenon and the Israeli side has to help us ... so what happened in Gaza is not repeated in the West Bank," Ajrami told Israel Radio.

"We want there to be law and order in all of the Palestinian Authority, because this is in our interests."

At Salman's funeral in Bethlehem on Thursday, an imam hailed him as a "martyr" but forbade mourners from firing guns in the air as often happens at Palestinian political protests.

Hadar voiced cautious hope for continued cooperation with Israel: "We will see what the investigation brings," he said. (Additional reporting by Said Ayyad, Editing by Caroline Drees)

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