ISRAELI Prime Minister Yitzhak Rabin got what he wanted from his visit to Kennebunkport - United States approval of the loan guarantees put on hold last year by President Bush. The president concluded that Mr. Rabin's freeze on new settlements in the occupied West Bank and Gaza was adequate to take the $10 billion in guarantees off the shelf again.
This development gives Israel the wherewithal to get on with the difficult task of housing and employing some 400,000 new citizens. The US had been inclined to help with this task all along - but not at the cost of appearing to back the expansionist settlement policies of former Prime Minister Yitzhak Shamir.
Of course, the step also gives Mr. Bush a political fillip, brightening his relationship with Jewish voters.
The Palestinians and other Arabs watching these developments can't be surprised. They knew how badly the Bush White House wanted to mend relations with Israel. They also know that the US administration, given its political challenge, needs results from the peace process. The pressure to compromise could now shift onto Arab shoulders.
When talks resume in Washington on Aug. 24, Palestinian autonomy will top the agenda. Some legalistic treatises on the subject are already before the negotiators. The sides would do well to step back from the details and try for an agreement on principle as to what autonomy should accomplish.
The Rabin government and the US may balk at Palestinian insistence on an elected legislative council, if it too clearly implies immediate Palestinian statehood. But whatever the name of the elected body that would administer the West Bank and Gaza, it should have clear rule-making authority. The Israeli government's military stranglehold must yield.
Autonomy also raises the sensitive issue of voting rights for the Arabs of East Jerusalem - which could bring up the thorny problem of the city's ultimate status.
The outlook, therefore, isn't rosy. But there's more room for optimism than before Rabin's electoral triumph. His government, while it's going ahead with 10,000 housing units already under way in the territories, brings to the table a commitment to peacemaking its predecessor lacked.
Rabin's move to repeal the Israeli law banning contact with the Palestine Liberation Organization is another hopeful sign. The PLO must have at least a clear background role in the peace process. The US government, committed by Bush to an active role in the coming talks, should follow suit by scrapping its own anti-PLO statutes.