RABAT, June 15 (Reuters) - Libyan leader Muammar Gaddafi said on Friday Palestinians should deal with their own problems, asking other Arab countries to stay out of a power struggle between Hamas and Fatah.

"The Palestinian issue has to be left to the Palestinians to deal with. Arabs have to stay away of the problem. What have Arabs done for the Palestinians? They have only exploited the issue for their own interests," Gaddafi told Al Jazeera television.

Asked about Hamas Islamists routing Palestinian President Mahmoud Abbas' Fatah faction in the Gaza Strip, Gaddafi said: "The fighting between rival factions is normal under such ... cirumstances. This struggle is motivated by ideology."

Gaddafi also played down fears that the fighting might lead to two separate statelets with Gaza controlled by Hamas and the West Bank under Fatah's rule and dash hopes for a future Palestinian state.

"(Hamas leader Khaled) Meshaal phoned me a while ago today to tell me that Hamas has no such plan in the Gaza Strip. He said a state in Gaza would be treason and madness," he said.

Gaddafi called on Palestinians to renew the Palestinian Liberation Organisation to revive their unity.

Gaddafi dismissed efforts by Arab governments, including a land-for-peace initiative which was relaunched at an Arab League summit early this year, to end the Israeli-Palestinian conflict.

"Arabs have no right to interfere in the Palestinian issue... Who has said that Arabs would accept Israel? Each Arab state has to speak for itself," he said.

Gaddafi reiterated his own solution to the conflict. "The only solution is the establishment of a single democratic state where Israelis and Palestinians will live together."

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