PERSPECTIVES ON MIDEAST PEACE : Israel Bites a Big Bullet, and a Palestinian State Is Certain : Rabin recognizes that the landscape of hostilities is changing, making this the best time to try for peace with security.

The great surprise with respect to the Jericho-Gaza agreement is that it was successfully negotiated directly between Israel and the Palestine Liberation Organization. The implications of this are far-reaching, maybe more far-reaching than the participants themselves have fully grasped. The essential meaning is this: If Israel can deal with the PLO, then Israel can live with a Palestinian state.

Indeed, it is just this implication that the Israeli right wing has grasped. On more than one occasion, former Prime Minister Yitzhak Shamir stated that his real opposition to dealing with the PLO was that this would legitimize Palestinian statehood. And Prime Minister Yitzhak Rabin’s distinct preference for dealing with residents of the territories rather than the PLO in Tunis was rooted in a desire to define the conflict as one between Israel and Palestinians living under Israeli control. By contrast, the PLO represents the Palestinian people as a whole, whether inside the territories or in refugee camps in Lebanon or in diaspora throughout the world.

The pending mutual recognition of Israel and the PLO is the mutual recognition of two nationalisms, each with valid claims over the land. We are moving swiftly back to the common sense of the 1940s--two nationalisms will require two states.

In the first instance, the Rabin government reached the conclusion that it was only by dealing directly with Yasser Arafat that it would be possible to cut a deal and move forward. In short, the Madrid negotiating framework, after two fruitless years, was circumvented. Neither the Palestinian nor the Israeli negotiators--nor, for that matter, the American intermediaries--played crucial roles in cutting the deal.

It seems that the Israeli government is finally coming to terms with the irony of the negotiations process. For years, Israel sought to de-legitimize the PLO, but when the crunch came in the actual negotiations, the erosion of PLO legitimacy emerged as a problem for advancing Israeli interests, not just with regard to attaining an interim status agreement, but also in looking ahead to the conditions for lasting peace.

Israel’s deepest interest lies in a peace accord that permanently ends the conflict between the two peoples. Whether or not, over the long run, the Palestinian people will feel bound by a final-status agreement--whether it will in fact be final--depends on both substance and process. Will it go far enough toward meeting the Palestinian conception of a just peace so that future Palestinian generations can view it as an honorable settlement? And is the party that signs for the Palestinians viewed as having the legitimate authority to bind them, now and in the future?

The PLO has claimed, and in 1974 the Arab League conferred upon it, the title of “sole legitimate representative of the Palestinian people.” But PLO legitimacy, in Palestinian eyes, has been greatly weakened over the last five years. In part, this is because Islamic fundamentalism, which offers a religious basis for legitimizing authority, is strongly challenging the PLO in the form of the Hamas movement. In part, it has been the PLO’s own fault, in its inability to secure Palestinian interests and in the blunders it has made along the way. In part, too, it has been the emergence of internal legitimacy questions for Palestinians who accept the PLO as an institution but call for democratization, reasonably asking what gives Arafat or others in Tunis a right to self-perpetuating leadership.

The coming together of these various strands resulted in a dangerous situation for those Israelis seeking a genuine accord with the Palestinians--the emergence of a vacuum of perceived Palestinian legitimacy. So a decision was made to shore up the PLO before it was too late. Thus, the Israelis have turned away from efforts to supplant the PLO and now are seeking to promote the fuller evolution of the PLO as the alternative. If the PLO changes its covenant, removing the long-out-of-date rhetoric about eliminating “the Zionist entity,” Israel will confer formal recognition of the PLO as representing the Palestinians--at least those now living under Israeli control. The next step will be some degree of democratization inside the PLO; this may initially take the form of electing PLO officials to administer local Palestinian authority under the Gaza-Jericho framework. Arafat is seeking to take up residence in the territories and exercise his considerable skills as a politician.

Rabin’s contention that the Gaza-Jericho agreement has nothing to do with a Palestinian state must be seen as an exercise in extreme literalness; the agreement does not specify that a Palestinian state is to be the ultimate outcome.

But the agreement is deeply relevant in several ways. No Palestinian faction, left, right or center, will settle for anything less than the acquisition of Palestinian sovereignty in the West Bank and Gaza. The exact nature of the Palestinian entity, whether it will be a free-standing, completely independent state, or have some degree of political union, such as a confederation, with Jordan, is open for discussion. But there is no Palestinian leadership that would seek or accept--and no Palestinian leader who would survive--a final-status agreement that resulted in anything less than Palestinian sovereignty in the West Bank and Gaza, plus some accommodation on Jerusalem.

This reality is not lost on Israeli analysts. What the present agreement demonstrates is an Israeli determination to bite the bullet, to make unsavory decisions and to cut through obstacles to ending the conflict.

Furthermore, Foreign Minister Shimon Peres, who played the key role in negotiating the agreement, and who has demonstrated an ability to work together with Rabin despite their intense rivalry, has been advocating moving swiftly to final-status negotiations, focused on the creation of a Jordanian-Palestinian confederation.

In its vociferous objections, the Israeli right wing is not being paranoid; it sees the writing on the wall. The Gaza-Jericho agreement sets the stage for another agreement, not too far down the line, in which the Palestinians gain full sovereignty over Gaza and then negotiate its extension to the West Bank. Once even a small measure of autonomy is established, there will be no moving back; autonomy will evolve toward sovereignty, and faster than may be spelled out in the formal document.

The key issue for the Israeli public is one of security--personal as well as national. The Palestinian authorities will have to prevent the territories from being used as a base for cross-border raids by spoiler groups, and will have to prevent attacks on the 140,000 Israelis living in the territories.

In addition, it will be important to demonstrate that every step toward Palestinian sovereignty brings Israel closer to full peace with the Arab states, particularly Syria. What many may not realize is that Arafat is eagerly awaiting an opportunity to demonstrate that Palestinian authorities are capable of handling the security challenges that lie ahead.

If they can, the Israeli public will go the next step toward “Gaza First” as the modality of the introduction of Palestinian sovereignty.