Israel's new government wants to end the Taba dispute. Its argument, with Egypt, is over who owns the one-half-square-mile piece of beach on the Gulf of Aqaba.
The Peres government's desire to settle the argument is part of its effort to warm up the ''cold peace'' that has existed since Egypt recalled its ambassador from Tel Aviv to protest Israel's 1982 invasion of Lebanon.
But a recent trip to Taba and talks with Egyptians, Israelis, and Western sources familiar with each side's position reveal that the two nations remain far apart on almost every aspect of the dispute.
''Where you come from now, that is Egyptian earth,'' explains the Egyptian police commander at the Taba border station, speaking to reporters who had just walked over from the land claimed by Israel.
Less than an hour later, on the Israeli-held Taba beach where he has operated a club for 14 years, Rafi Nelson, an Israeli, speaks just as adamantly.
''I left a bay further south in 1970 to come here because I knew this place was Israeli,'' the deeply tanned, gray-haired Mr. Nelson says. ''I will stay.''
These differing attitudes illustrate why the dispute over this lovely scrap of sand and palm trees has become a point of contention that seems to defy solution.
The Israelis say they are so sure the beach belongs to them that they have allowed Eli Papushadou, an Israeli businessman, to build a $25 million resort hotel just north of Nelson's Village. Papushadou takes credit for helping convince the Israeli government in 1979, when the peace treaty with Egypt was signed, that Israel had a legitimate claim to Taba.
The Israelis had seemed inclined to accept the Egyptian claim at the time. Taba had been designated as Egyptian in 1906 when the Ottoman Empire and Egypt drew a boundary between the Sinai Peninsula and Palestine. Taba was again designated Egyptian territory in the 1949 armistice agreement between Israel and Egypt and came under Israeli control only when the Israelis captured the whole Sinai during the 1967 Arab-Israeli war.
When the Israeli government ordered Papushadou to halt construction on his site in 1979, he did some research and found what he said is convincing evidence that Taba is in fact Israeli.
''I pushed very much, and in the end, I convinced the prime minister that we have a very, very big chance that this area can be Israel because we have all the documents,'' said Papushadou during an interview. Israel has not revealed the documents publicly; it is treating the dispute as it would a court case. Under an arrangement made to facilitate the Sinai handover in 1982, the Israelis maintain a border station where the Egyptians say the border should be drawn. The Egyptians maintain a station six-tenths of a mile to the south, where the Israelis say the border should be, and in-between lie Papushadou's Aviyeh Sonesta and Nelson's Village, both popular tourist attractions.
In his first two months in office, Prime Minister Shimon Peres has met a half-dozen times with Egyptian charge d'affaires Muhammad Bassiouni. Both sides are reportedly far from deciding even on what level of talks is appropriate.
For each side, Taba symbolizes what is wrong with the Israeli-Egyptian peace treaty of 1979.
From the Egyptian point of view, Israel's claim to Taba is specious and designed to thwart the late President Anwar Sadat's declared intention to get back ''every inch'' of the Sinai.
For the Israelis, Egypt's insistence that Taba be given back is evidence of the inflexibility of the Egyptian government. The Israelis say the Egyptians use the issue as another excuse to maintain a ''cold peace'' with Israel.
Sitting at a table in his vacation village, Rafi Nelson waves toward the clearly visible Egyptian border fence.
''They are not pleasant in this peace,'' he says. ''And sometimes, we are not pleasant.''