Middle East Saying No to Arafat

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That means the U.S. is likely to hear nothing other than Shamir's intransigent line. The Prime Minister fervently believes a Palestinian state in the West Bank and Gaza Strip would be just the first victory in a P.L.O. war to devour all of Israel. Thus he has found reasons to resist virtually all plans for peace talks, since they inevitably call for a trade of Israeli- occupied land for peace. Shamir's prime objective is to prevent the Palestinian initiative from advancing further and keep the door closed to the risk of negotiations.

Yet Israeli leaders are acutely aware the P.L.O. is winning the propaganda war. Said Foreign Ministry spokesman Alon Liel: "Israel has to come up with ideas in order to reverse the momentum." To that end, Israel is not likely to crack down harder on the Palestinian uprising in the territories as long as the level of violence rises no higher. Already under pressure from Western allies, Israel does not want to infuriate them further with draconian measures. That may be one reason Shamir has kept Labor's Yitzhak Rabin as Defense Minister, thwarting Sharon's intense campaign for the post. The ambitious Sharon, Shamir's archrival for control of Likud, has long boasted privately that he could end the intifadeh in a week.

Also losing out were the four religious parties, which won 18 Knesset seats. Shamir's initial plan of forming a government with them rather than Labor disintegrated amid the new diplomatic pressures and strong opposition from American Jews to the four parties' demands for stricter religious observance.

In Washington, U.S. officials expressed relief that the Labor Party may continue to exert a moderating influence in the Israeli government. They feel that despite Israel's clear rejection of Arafat's initiative, peace negotiations may eventually begin if the P.L.O. can back up its talk of compromise with deeds. The U.S. plan, subject to adjustment after George Bush becomes President on Jan. 20, calls first for collecting proof that Arafat is keeping his pledge to halt P.L.O. terrorism. The U.S. hopes that after about six months this period of restraint will convince the Israelis that Arafat is sincere in recognizing Israel's right to exist and that he can be bargained with. At that point, the U.S. Administration will have to find enough political will and diplomatic muscle to persuade a reluctant Israel to enter into negotiations. For 40 years Israel has preferred to say no to the U.S. as little as possible. But the two allies could face an unprecedented showdown unless the Bush team can figure out how to lure Israel into negotiations without a major rupture.

The U.S. is also urging Israel, so far without any success, to ease its iron-fist handling of the year-old intifadeh and grant limited autonomy to the 1.7 million Palestinians living under occupation. "They need to do things to make the Palestinians feel more human, more in control of their lives," says a U.S. official. Meanwhile, the uprising has reached a stalemate: the intifadeh can't defeat Israel's occupation, but Israel can't stop the rebellion.