Taba, Israel — With its warm sand-and-pebble beaches and glittering ocean views, Taba seems a world away from the turmoil of the six-month Palestinian intifadah (uprising). But just over the horizon a diplomatic cloud is forming that could cast a dark shadow on Israel's premier beach playground. A panel of five arbitrators is meeting in Geneva to settle a nine-year controversy over whether Taba really belongs to Israel. The sliver of desert on the Red Sea coast is also claimed by Egypt.
If the panel decides in favor of Egypt, Israel could lose control of Taba's two lucrative resort facilities. But there's more at stake than surf and suntans.
Failure to resolve the dispute could plunge Israeli-Egyptian relations - already strained by dissatisfaction with the fruits of the 1979 Camp David treaty - into a major diplomatic crisis.
An unfavorable judgment is also likely to make Taba one of the most contentious political issues in Israel. The country's leading political blocs, Labor and Likud, could launch an acrimonious election-year debate over ``who lost Taba.''
For almost a year the United States has been trying to help the two sides reach an out-of-court settlement before the arbitration panel makes its findings. US efforts to broker the dispute date to the early 1980s.
Israel claims that 1906 British maps placed Taba in Palestine. Egypt's claim to the tiny patch of desert is based on border markings set when the 1949 armistice agreement between Egypt and Israel was signed.
Time ran out on efforts to resolve the dispute before the Camp David treaties, mediated by President Jimmy Carter, took effect and Israel returned the Sinai to Egypt in 1982.
Following months of negotiations and a 1986 summit meeting between Egyptian President Hosni Mubarak and then-Israeli Prime Minister Shimon Peres, the two sides agreed to submit the issue to binding arbitration. That panel could render a verdict by mid-July, but informed sources say it may request a delay until September.
Last month, the US State Department's legal advisor, Abraham Sofaer, proposed that Egypt be given sovereignty over Taba, while Israel be allowed to retain effective control of the 700-meter (765-yard) beachfront strip.
The proposal was rejected by Israel. But, amid reports that the arbitrators are leaning toward Egypt, Israeli officials are now said to favor a final try at finding a compromise solution that would make an arbitration decision unnecessary.
Egyptian sources say if ``meaningful sovereignty'' is given to Egypt, it will be very accommodating on questions of Israeli access to the property.
For Egypt, they say, Taba is a symbol of Israeli compliance with Camp David.
``The basis for a deal has been there for the last year,'' says an informed US official. ``The parties are interested but they haven't quite made the decision to move.''
The US worries the arbitration panel's decision could set off a political storm. ``If you have two sides satisfied, it's better than one pleased and the other not,'' says one official.
``The two sides are not really that far apart,'' says one participant in the process. If they can get past political positioning, ``there is a basis for them to sit down and talk directly,'' he says.