Israel Offers Arabs Control of Hospitals : Mideast: Plan is intended to test administrative skills in the occupied areas.

Israel offered Wednesday to transfer to Arab control the hospitals and other public health facilities in the West Bank and Gaza Strip as a test of Palestinian administrative skills.

As the Middle East peace talks neared the end of a four-day round, Deputy Foreign Minister Benjamin Netanyahu, the Israeli delegation spokesman, said that if the Palestinians go along with the plan, it would improve the quality of life in the territories that Israel has occupied since the 1967 Middle East War.

Netanyahu said that Jerusalem is ready to consider “a kind of patch quilt of pilot efforts” to determine if Palestinian autonomy over most aspects of daily life is compatible with Israeli security. Israel had earlier proposed Palestinian elections to pick mayors and city council members for West Bank and Gaza cities as a test of the election machinery.

Palestinian delegation spokeswoman Hanan Ashrawi dismissed Israel’s gradual approach as “racist.” She called it demeaning to suggest “that the Palestinians . . . need a period in which to demonstrate that they are capable of handling democracy.”

“Nobody has the right to decide on the basis of race, or ethnic origin or whatever, whether one people is worthy or deserving of human rights and democracy, or not worthy or deserving of these rights,” she said.

The current round of separate face-to-face talks between Israel and each of its neighbors--Syria, Lebanon, Jordan and the Palestinians--ends today because the Israeli delegation insists on returning home for next week’s Memorial Day and Independence Day holidays.

The Arab delegations all protested that the round was too short. Netanyahu said that Israel will be ready to resume as soon as the holidays are over.