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Next Step : Palestinian Lands Becoming a State in All but Name : With Israeli pullout in the works, self-rule authority prepares to assume West Bank control.


JANIN, Israeli-Occupied West Bank — "Hail our liberation!" reads the slogan inside Ismail Haj Ahmed's hole-in-the-wall coffee-and-sweet shop off Janin's crowded marketplace. "Welcome the Palestinian state!"

First painted amid enthusiasm for the historic peace accord between Israel and the Palestine Liberation Organization in September, 1993, the slogans have faded over the last year and a half with the general Palestinian disappointment at the slow implementation of that agreement.

Two weeks ago, however, the youngest of Haj Ahmed's five sons, Ibrahim, 18, repainted the slogans at his father's shop and added, "Janin next!"

"People feel that things are beginning to move again, that the Israelis will be gone in two, three, no more than four months, and we will have elections for our first Palestinian government by the end of summer," said Abdullah Kamil, a local leader of Fatah, the mainstream Palestinian movement.

"And for Janin, it should happen a lot faster."

Despite stop-and-go negotiations between Israel and the PLO and murderous attacks by Muslim radicals opposed to the peace agreement, the Palestinian Authority is preparing to assume control of the West Bank in July.

In those negotiations, in Israeli Cabinet decisions and in the PLO's own plans, the foundations are being laid for an independent Palestinian state long sought by Arabs of the West Bank and Gaza Strip and the Palestinian diaspora.

The emerging elements:

* Broad PLO agreement with Israel on a Palestinian legislative council that will be elected, probably in September, to govern the West Bank and Gaza Strip. Members will be elected from districts on a proportional basis to ensure the inclusion of all factions. A council chairman, expected to be PLO leader Yasser Arafat, will be elected separately with power to appoint his ministers.

* Before the elections, the Palestinian Authority will take over more governmental functions in the West Bank, including labor, commerce and industry, insurance, energy, telecommunications and the postal service. New municipal councils will be established by the PLO in major towns. The Palestinian Authority assumed control of the Gaza Strip last May.

* New PLO efforts will be made to broaden the political base of the Palestinian Authority through discussions with opposition groups, including the Islamic Resistance Movement, known as Hamas, and others opposed to the agreement with Israel. PLO officials want maximum participation in the elections and say they are willing to change the draft electoral law to encourage it.

* A gradual redeployment, already beginning, of Israeli troops out of Palestinian towns and villages in the West Bank to areas around the 130 Jewish settlements in the region and along the roads leading to them. Target date for completing the pullback is late August.

* Israel is planning a "separation zone" between Israel and the West Bank, effectively establishing a border between the Jewish state and the Palestinian territories. Costing as much as $600 million just to establish, the zone will be patrolled by Israeli soldiers and police.

After more than 27 years of Israel's occupation of the West Bank, the new "security line" would demarcate where Israel ends and where the Palestinian territories begin, which would constitute as much an acceptance of a Palestinian state as the earlier agreement on self-determination on the West Bank and Gaza Strip.

Under its unilateral plan, Israel would keep considerable territory captured in the 1967 Middle East War: East Jerusalem; a large corridor that stretches eastward toward Jericho, cutting the West Bank almost in half; the Gush Etzion group of Jewish settlements southwest of Jerusalem, and the Latrun Salient across which the Jerusalem-Tel Aviv highway now runs.

Most of the 130,000 Jews who have settled in the West Bank over the last quarter of a century, and who view the region as part of the biblical Land of Israel, will be left on the Palestinian side of the line.

"It does have political meaning," Police Minister Moshe Shahal said of the controversial plan, drawn up at the request of Prime Minister Yitzhak Rabin. "It is defining that there are two entities. This is the reason why those who had a policy of annexation and who dream of a Greater Israel object to the idea. This means that it was just a dream and cannot be realized."

Jewish settlements on the Palestinian side of the border immediately began bidding for the line to be redrawn so that they would on the Israeli side.

"We won't agree to remain outside the fence," said Shlomo Katan, the head of the Alfei Menashe settlement, which is in commuting distance from Tel Aviv but a couple of miles on the "wrong side" of the West Bank border.

Deputy Defense Minister Mordechai Gur said Israeli troops would be able to protect most Jewish communities even after they pull out of Palestinian towns and villages, but he warned that perhaps 30 of the 130 settlements would be too isolated to guard easily.

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