Mideast Win-Win

THE Declaration of Principles initialed by Palestinian and Israeli representatives, like the June 1967 War and the Camp David Accords, is a defining moment in recent Middle East history. Like them, the agreement needs to be read on two levels: conditions on the ground, and what it means ideologically.

In the ongoing battle by Israelis and Palestinians over whose vision of Palestine will dominate, the agreement represents a clear victory for Israel. For the first time not just Palestinians, but the PLO itself, has formally acknowledged the privileged position of the more than 150 Israeli settlements and 300,000 Israeli residents living in the occupied territories. The agreement to permit Israel to maintain complete control over the territories for the foreseeable future illustrates the Palestinians' inability to shape their own future.

Israel retains the authority to continue expanding the settlements. Its prerogatives have not been circumscribed. The current Israeli population in the Gaza Strip is 4,500, in the West Bank 120,000, and in East Jerusalem 160,000.

Palestinians have acquiesced in a form of indirect Israeli rule championed by Moshe Dayan from the start of occupation. For 30 years Israel attempted without success to create Palestinian leaders who would agree to Israel's Faustian bargain. The slogan of mayors elected in 1976 was, ``No to the civil administration.'' The ill-fated ``Village Leagues'' created in the early 1980s also failed to win Palestinian agreement to exercise limited administrative powers at a cost of easing Israel's occupation burdens.

The powers Israel proposed to Palestinians for these abortive initiatives - aimed at creating Palestinian partners for Israel's permanent settlement in the territories - emerged from the same calculations of interest as those accepted by PLO Chairman Yasser Arafat. By engaging himself in such a system, Prime Minister Yitzhak Rabin believes he has won a victory that will not only ensure Israel's security and lessen the cost of occupation, but will end the 100-year war with Palestinians on terms that put Israel in control of the territories.

It is here that the advantages won by Mr. Arafat in the agreement assert themselves. Treasonous as Arafat's concessions may appear, Mr. Rabin too made a momentous choice by recognizing the PLO as the legitimate Palestinian representative. Israel is entering a process of reconciliation with the prospect of Palestinian independence under PLO leadership.

A former Likud minister under Yitzhak Shamir says, ``You can hear from Rabin and Peres that they are totally against the idea of a Palestinian state. [Yet] it is almost inevitable that at the end of the day we will be pushed to terms and a timetable for the establishment of a Palestinian state.''

Rabin may hope to tame the PLO through Arafat. But he has changed forever the dynamics of the Israeli-Palestinian conflict. However limited the powers invested in the PLO, the ideological debate now is centered on the momentum toward Palestinian independence.

The debate in Israel will no longer revolve around sterile policies aimed at avoiding the reality of the PLO or the power of Palestinian nationalism. No matter what mechanisms Israel establishes on the ground in the West Bank and Gaza Strip to preserve its interests, the policies Israel adopts must take into account the legitimacy it has accorded the PLO.

Israel will struggle against its decision. It will depend on the limits on Palestinian power agreed to by Arafat to preempt the drive toward independence. Yet Israel's recognition of the PLO presents Palestinians with an advantage and a challenge they have never had - shepherding Israeli-sanctioned autonomy to independence.

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