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The deal could lay the groundwork for something close to an independent Palestinian state. Following the troop redeployment, Palestinians in the West Bank and Gaza Strip will elect an 82-member council with broad responsibility for conducting its own affairs, such as the power to settle land disputes and operate television networks. A separate election for a chief executive--almost certain to be Arafat--will also be held. During the interim period of self-rule, scheduled to last until a final settlement is reached no later than May 1999, Israel will retain control of borders, and Palestinians will not be permitted to exercise full control of their external affairs. But the ultimate destination is undeniable. "Is this the beginning of separation?" asks Nissim Zvilli, general secretary of the Labor Party. "Of course."

That is the main reason why extremists on both sides are bent on sabotage. On the day of the Washington ceremony, some hard-line Jewish settlers announced the formation of a volunteer militia to "enhance security." Later in the week hundreds of Israeli settlers rampaged through Hebron chanting, "This is Israeli land--our homeland!" At the same time, Hamas issued a statement whose title made its judgment clear: "Yes to the Resistance, and One Thousand Nos to the Agreements of Humiliation and Shame." Even beyond the extremist threat, though, the picture looks murky. While many Jews fear they have compromised their safety, some Palestinians seem convinced they are being forced to accept a deal on terms dictated by Israel and endorsed by the West.

The misgivings are not simply emotional. On the Jewish side, even some supporters worry they may be trading concrete security for ephemeral promises of peace. This is being done, moreover, at a time when terrorist attacks on Israelis since the Oslo accord are up 73% over the preceding two years, and when Arafat has failed to restrain extremists in his own community. When their troops pull out of the West Bank's six main urban areas, many Israelis fear the territory will become a safe haven for terrorists. "Everyone feels uncomfortable," says Danny Shek of the Israeli Foreign Ministry. "There is a sense that we are giving more than we are getting out of this agreement."

To some Palestinians, however, what they are getting seems so grudging and circumscribed as to be almost intolerable. Because the Israelis have reserved the right to cut the roads between the seven "free" towns, Palestinians fear that their thoroughfares may soon be lined with checkpoints and roadblocks, hampering movement and turning their urban centers into isolated cantons. And how, ask Arafat and his people, can the Palestinian Authority run a state in the West Bank when Jewish settlers remain in their midst?

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MR. DAHI, a shop owner in Tehran, on President Mahmoud Ahmadinejad's plan to phase out Iran's system of subsidizing everyday goods to insulate the economy from new sanctions; analysts say the move could result in skyrocketing prices and mass protests