Round 2 - E. Jerusalem

THE rhetorical fireworks involving PLO leader Yasser Arafat and Prime Minister Yitzhak Rabin of Israel are not a serious crisis, nor should either side make them one. Rather, Mr. Rabin's stern statements after Mr. Arafat used two controversial words in a speech in South Africa can be seen as the start of Round 2 in the negotiation for an Israeli withdrawal from the occupied territories that began Sept. 15. Round 1 ended last week as Israeli forces redeployed in the Gaza Strip and Jericho, ending a 27-year direct occupation in those areas.

Now the negotiations get more difficult still. Gaza and Jericho were basic areas of withdrawal agreed to during the White House handshake. Even these places, which are the least desirable and most ungovernable from the Israeli standpoint, were tough to agree about in terms of size and status. What now must be decided is the shape and character of the Israeli withdrawal from the rest of the West Bank, including East Jerusalem.

The rhetoric and positioning of the two sides should not divert attention away from the question an honest broker must ask: Are the parties moving toward a fair two-state solution? Or is the asymmetry in the relationship - the advantage held by Israel - moving the process in a direction in which the choice land is held by one side?

Perhaps the key test of this question is the status of Jerusalem. It is no accident that the tiff between Arafat and Rabin this week was over Arafat's use of the word jihad in speaking of the Palestinian attitude if East Jerusalem is lost. For decades the international community, the UN, and even the United States, has agreed that East Jerusalem is occupied territory that must one day be returned to the Palestinians.

According to the Oslo Accord, the final status of Jerusalem is not a subject of talks until 1998, unless both parties agree to take it up earlier. Yet as the shape of Palestinian autonomous territory in the West Bank is negotiated, the talks will inevitably run into the Israeli policy of a ``Greater Jerusalem'' which is expanding the metropolitan borders of that city all the way to Jericho.

Arafat's words in South Africa were those of a man who has no leverage, who has not even yet seen the areas of limited autonomy he must police, whose popular basis is eroding rapidly, and who must be wondering, as he looks at the terrible problem of Gaza and the possibility of losing Jerusalem, if he has not in some way been set up to fail. Can he count on Washington to be an honest broker?

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