Most of Disputed Taba Awarded to Egypt : Israel Left With Slim Hope of Keeping Its Sinai Beach Resort

An international arbitration panel on Thursday awarded most of a small patch of hotly disputed Sinai desert beachfront to Egypt, leaving Israel with slim hopes of retaining some of the territory, known as Taba.

The arbitration panel, which met in Geneva, ruled that 15 boundary markers set by British colonial rulers constituted the true Israeli-Egyptian border, thus putting essentially all of the 700-yard-wide beach resort in Egyptian hands.

The panel stopped short, however, of defining the exact location of the border for about 190 yards from the crucial 15th boundary marker to the Gulf of Aqaba, instead leaving that issue to negotiations between the two countries. This part of the land includes the $20-million Hotel Aviya Sonesta, developed by the Israelis, and the adjacent Rafi Nelson tourist village.

The decision on Taba was a major step in settling a festering, six-year-old dispute between Israel and Egypt. Israel occupied the shady strip along with the rest of the Sinai Peninsula in the 1967 Six-Day War and decided to hold onto it even after Israeli troops pulled out of most of the Sinai in 1982.

The hotel and beach, which feature skin diving, wind surfing and topless bathing, have been popular with Israeli and foreign tourists alike, and Israel asserted that border maps from 1906 put Taba under Israeli control. Egypt, meanwhile, held that the key boundary marker, known as No. 91, gave Taba to Cairo because it was among several masonry pillars placed by British military surveyors in 1917 to delineate the border between Egypt and what was then Palestine.

The Israeli and Egyptian governments decided to resort to arbitration in 1986 when talks between them stalled.

Thursday’s announcement sets a promising precedent for Middle East peace efforts by showing that “disputes with Israel can be solved through the legal process,” a senior Egyptian official in Cairo said.

“It gives us great pleasure that the verdict of the Taba arbitration panel confirms Egypt’s historic and legal right to that precious piece of our land,” Butros Butros Ghali, the Egyptian minister of state for foreign affairs, said in announcing Egypt’s official reaction to the verdict.

But at the same time, the senior Egyptian official and others cautioned, the decision does not mean that the protracted and at times bitter legal struggle for tiny Taba is over.

On the contrary, these officials fear, the negotiations that must now begin to fix the terms of Taba’s transfer to Egypt could themselves become protracted and bitter and, in the short run, increase tensions instead of easing them.

In Israel, a Foreign Ministry spokesman said the nation took some comfort from the incomplete decision, which he said gives Israel some “room for maneuver.”

The timing of the arbitration panel’s decision could add to the complications in view of the parliamentary elections taking place in Israel next month. The Labor Alignment and Likud Bloc currently share power in a coalition government.

Israeli Foreign Minister Shimon Peres, who heads Labor, and Israeli Prime Minister Yitzhak Shamir, leader of Likud, are locked in a bitter general election contest.

“The real key is how (the decision) plays in Israel and whether or not it becomes an election issue there,” said one Western diplomat who has closely followed the Taba dispute.

Shamir, who long opposed giving up Taba, took the decision as a sign that Israel ought not to let foreigners decide important issues for Israel.

His comments appeared to suggest that Israel should reject any international conference called for the aim of settling a conflict over Israeli occupation of the West Bank and Gaza Strip. The Reagan Administration is pushing for such a conference as a means of settling the Israeli-Palestinian conflict and the fate of the occupied territories.

Peres responded to Thursday’s decision by saying only that Israel would abide by the ruling. He favors an international conference to resolve the Palestinian issue.

The announcement set off a political debate over “who lost Taba,” with Likud and Labor politicians exchanging accusations. Some politicians had called the land vital to Israel’s access to the Red Sea.

The Geneva tribunal, headed by Gunnar Lagergren of Sweden and composed of members from Switzerland, France, Israel and Egypt, voted 4 to 1 in the Taba dispute. The Israeli delegate, Ruth Lapidoth, cast the only dissenting vote.

Privately, Egyptian officials who spoke on condition of anonymity expressed concern that the panel, in limiting its decision to whether the 15 boundary markers were correctly placed, had left open the question of which side of the border the hotel is on.

Egypt has maintained that the border runs in a straight line to the gulf from the No. 91 marker, putting the hotel and the beach in front of it in Egyptian territory.

One legal expert said the ruling makes it “extremely difficult” for Israel to uphold its claim to the resort because to do so would “involve a monumental leap of the imagination to assume that the border suddenly loops backwards.” But he also noted that the settlement was “not black and white.”

Any attempt by Israel to retain the hotel would be totally unacceptable to Egypt and could precipitate a major crisis in the two countries’ already unsteady relations, other experts said.

Even if Israel chooses not to dispute this point, implementation of the Taba verdict could be delayed by several other unresolved disagreements, officials said.

There is, for instance, no agreement yet on the question of compensation if the hotel is transferred to Egypt. In talks in Cairo last month, Israel asked Egypt to accept continued Israeli ownership of the hotel or, failing that, Israeli management of the resort complex, Egyptian officials said.

Such a concession would be difficult to make, however, because Egyptian laws stipulate that any foreign company in Egypt must be 51% Egyptian-owned and employ Egyptians in 90% of its work force.

The possibility of Egypt buying the hotel outright has also been discussed, but no agreement seems near on a purchase price.

Williams reported from Jerusalem and Ross from Cairo.