Taming Gaza Strip a Tough Test for Palestinians : Mideast: PLO must transform impoverished occupied area into a model for its future state.

Jamil abu Tagiyah was shoveling bread loaves into his open furnace Thursday when a customer asked the refugee baker about the historic Palestinian-Israeli proposal to liberate this tortured strip of land as a first move toward peace.

“Do you believe this?” the sweaty baker replied, never taking his eyes off the furnace in this gritty basement bakery in the poorest corner of the Israeli-occupied lands. “The Israelis are going to withdraw? Just like that? Forget it.

“I’ll believe it when I see it. I’ll believe it when they release all the Palestinian prisoners”--among them the baker’s 23-year-old son, Iyad, held for the past year in an Israeli prison without a sentence.

But just around the corner, in a dusty front yard filled with chickens and pigeons, Tawfik Mabhouh, a prominent leader of this, the largest Palestinian refugee camp in the Gaza Strip, smiled knowingly.

“The people in Jabaliya camp, well, they do not trust the Israelis,” he said. “But soon they will see that the choice of Gaza first is an Israeli choice. The Israelis tried for many years to control the Gaza, and they failed.”

Under the proposed “Gaza-Jericho first” agreement that Palestinian and Israeli negotiators are poised to sign, Mabhouh and hundreds of other local Palestine Liberation Organization leaders will be at the front lines of a Herculean task: They must tame the overpopulated and impoverished Gaza Strip amid threats from within and without and ultimately transform this land of garbage heaps, seething cynicism and tin-shanty refugee camps into a model for a future Palestinian state.

In this land better known for refugees and rebellions than for reconciliation, PLO leaders such as Mabhouh know all too well that the stage now set for the dawning of the Palestinians’ dearest dream also marks the end of Israel’s worst nightmare--one the PLO soon could share.

“The Gaza was giving the Israelis insomnia,” he said. “This way they can sleep a little better.”

Gaza’s statistics alone read like an index to the horrors that Israelis wish to leave behind and the challenges the Palestinian leadership, under PLO Chairman Yasser Arafat, has agreed to inherit.

This is a strip of 233 square miles of land with little industry, few roads and more than 740,000 people--85% of them Palestinian refugees living in seven compact and decrepit camps. The average income is $2,500 a year. Nearly 40 of every 1,000 babies born here die in infancy. The unemployment rate is now 60%, up from 20% when Israel sealed off the Gaza Strip and West Bank for security reasons last April.

It is also the hotbed of Palestinian Islamic fundamentalism, bred not only by deep poverty but by statistics far more human.

Since the Palestinian uprising known as the intifada began in December, 1987, nearly 600 Gazans have been killed by Israeli security forces, 24,600 others were injured by bullets and 81,000 were injured from tear gas and beatings, according to the United Nations. In return, Palestinian extremists in Gaza have killed 16 Israeli civilians and 12 soldiers, injured scores more and relentlessly attacked Israel’s presence here with stones, knives and bullets during countless demonstrations.

The net result: two powerful and now-outlawed extremist religious factions known as Hamas and the Islamic Jihad, groups that claim to represent the sentiments of nearly half of all Gazan refugees.

Both militant Islamic Palestinian groups have openly opposed the peace process that began nearly two years ago.

Sheik Hassan Deib brought a human face to internal Palestinian dissent Thursday. But even in his angry rhetoric against a Palestinian leader he believes is selling the Palestinians out, the gray-bearded imam stressed that the fundamentalist factions will not actively oppose the proposed interim settlement that Arafat and Israeli Prime Minister Yitzhak Rabin have indicated they will sign.

“We’re not interested in civil war,” said the sheik, who heads the Islamic Society in the Gaza Strip.

Explaining the fundamentalists’ opposition to the peace talks, the imam said, “For us, Jerusalem is the most important issue, and the Jews say it has been unified forever. (There is) also the issue of the Jewish settlements in the territories. Israel refuses to remove them. Third, the border. The borders will remain under Israeli authority. So where is Palestinian authority? It is a joke.”

But he asserted that Gaza’s Islamic forces have no plans to resist Arafat with force. In fact, he said, they plan to play the role of a loyal, democratic opposition.

“Arafat will rule by himself. That is exactly what is going to happen,” Sheik Deib said. “And we will not actively resist as long as he leaves for us the freedom of religion and the freedom of worship”--and, he added pointedly, the freedom to contest elections.

“We could win these elections very easily,” the imam added with a smile. And when in power, he said, the fundamentalist factions would use Gaza as a base for building an Islamic army strong enough “to liberate the rest of Palestine.”

Back in Tawfik Mabhouh’s dusty front yard, though, it was clear that such talk was far too abstract and remote even to contemplate for the moment. Mabhouh, self-described secular moderate, said he only prays that religious leaders like the imam are good to their pledge of peace.

“If Hamas is going to be a democratic opposition, there will be no problems,” he said. “Maybe in the beginning there will be some problems with these groups. Maybe some action will have to be taken to control them. But in the end, if the Palestinians will rule here, then things will be under control.”

After all the decades of hate, anger and war, Mabhouh said, it’s understandable that “there are such minorities on both sides.”

More important, he added, there are dilemmas far less ideological and far more immediate that will face any new force attempting to take control of this troubled strip.

His own refugee camp is a case in point, he said. It is a warren of crumbling shacks, dirt alleyways, deep poverty and lingering hate. Its less than two square miles are inhabited by more than 60,000 refugees. The PLO plan: “It will be demolished bit by bit,” he said, “and a town will come up in its place.”

Gaza’s strategic location between the Arab world and Israel would make a future Gaza port a rich transit point for world trade, he insisted. And its miles-long stretch of beachfront could draw international tourism.

“Yes, in the long run, I am optimistic,” Mabhouh said. Then he paused, looked around and smiled.

“Not very quickly, of course. Give away the first five years. There will be a lot of difficulties. Because, as you can see, Gaza is starting from far below the zero point. But the PLO are Palestinians. And they have a better chance than any of the others before them.”