"All those who believe truly in a peace based on justice . . . have been astonished by the extreme hostility of the Israeli reactions to the consequences of the Jordanian measure and to the tendency to proclaim Palestinian national independence and to create a provisional government of the future Palestinian state," he said.
The Palestinian state, he said, would be formed on "land liberated from Israeli occupation," which he indicated would be limited to the occupied territories of the West Bank and the Gaza Strip. Excluded would be areas within Israel's pre-1967 borders.
Through negotiations, Arafat said, it would be possible "to discuss the agreement on arrangements for international guarantees of peace among all the states of the region, including the independent Palestinian state."
But he added, "Today our people are confronting the iron-fist policy and the Israel war machine with stones; children and youths, creating the image of a Palestinian David pitted against a Goliath armed to the teeth with the latest means of warfare and destruction."
Arafat's first official visit to France prompted public demonstrations Tuesday in normally placid Strasbourg. In the morning, Jewish groups protested the invitation to the PLO chief, and in the afternoon pro-PLO groups showed their support for him.
Arafat was not officially invited by the 12-nation European Parliament; the invitation was issued privately by the Parliament's so-called Socialist Group, which includes Socialists, Social Democrats, Communists and members of the environmental Greens parties. He is to address other members of the European Parliament today.
'Rehash of Old Theories'
In Israel, Avi Pazner, spokesman for Prime Minister Yitzhak Shamir, said of Arafat's address: "It's a rehash of old theories of the PLO that ultimately aim at destroying Israel. Arafat has made his position clear that there is no change in the ultimate plan of the PLO."
Added Alon Liel, spokesman for Shimon Peres, the country's more dovish foreign minister: "So far, nothing new. We will still wait to see if there is some decision later on. These are, after all, just declarations."
That both Shamir's and Peres' offices shared essentially the same view reflected two things--the generalized mistrust of Arafat and the diplomatic language in which the PLO leader couched his speech. Meanwhile, Arafat's failure to unequivocally accept Security Council Resolutions 242 and 338 saved the Reagan Administration from the embarrassment of having to reassess its Middle East policy in the midst of an election campaign.
Vow by Kissinger
More than a decade ago, then-Secretary of State Henry A. Kissinger promised Israel that Washington would never deal with the PLO until the guerrilla organization accepts the U.N. resolutions, renounces terrorism and acknowledges Israel's right to exist. Each Administration since then has reiterated those principles.
U.S. officials said earlier that if the PLO ever met the Kissinger test, Washington would have little choice but to react in some way, either by lifting its ban on relations with the PLO or by changing the conditions. Either step would be hotly controversial.
Times staff writers Michael Ross in Tunis, Norman Kempster in Washington and Daniel Williams in Jerusalem contributed to this story.