Giving Peace A Chance : The Payment Plan for Peace : Although the U.S. government hopes to get most of the money needed from others, it clearly has signed on as the donor of last resort.

By NORMAN KEMPSTER

Sept. 14, 1993 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

The U.S. government was left standing awkwardly on the sidelines when Israel and the Palestine Liberation Organization wrapped up their historic peace agreement. But no one expects the Americans to be left out of what shapes up as a far more complex struggle--making Palestinian self-rule work.

U.S. officials believe the stakes are so high that Washington must do whatever is necessary to smooth the way for Israelis and Palestinians to turn their agreement in principle into a full-grown plan for Palestinian self-government, and then to provide advice, political muscle and money to guarantee the plan’s success.

If Palestinian self-rule does work, these officials say, pro-Western moderate forces will be strengthened throughout the Middle East and radical movements like the one accused of the World Trade Center bombing in New York will be isolated.

Moreover, if the agreement really ends the century-long Israeli-Palestinian conflict, it will almost certainly clear the way for Middle East-wide economic, environmental and water resource development projects that have been stifled for decades by Arab-Israeli hatreds.

“As the Palestinians begin to control their own affairs, they have to deliver,” a senior State Department official said. “They can’t fail now. As they begin to deliver they will strengthen the moderate forces throughout the area.” At the same time, he said, Israeli Prime Minister Yitzhak Rabin “has to be in a position where he can demonstrate that what he has done works.”

Even before the bloated hoopla of Monday’s Israel-PLO signing ceremony began, the Clinton Administration began soliciting funds from the world’s wealthy nations to meet the cost of Palestinian administration in the Gaza Strip and the West Bank town of Jericho. Although the U.S. government hopes to get most of the money from others, it clearly has signed on as the donor of last resort. If the Saudis, the Japanese and the others don’t come through, the American taxpayer will have to.

Nobody knows yet how much it will cost. But no one doubts that the tab will total billions of dollars as the once well-financed but now virtually bankrupt PLO sets up governmental offices in a territory that no one considers economically viable.

The PLO says it needs $11.9 billion over the next seven years. Other estimates are almost as high. But it’s not just money.

President Clinton has already promised Rabin that the United States will come to Israel’s aid if peace turns bitter and a strengthened PLO endangers Israeli security. Israeli opposition groups, led by the Likud Party, claim that the pact poses just such a danger to the Jewish state.

After decades of U.S.-Israeli cooperation on security matters, that sort of American guarantee goes almost without saying. But U.S. officials contend that Washington will also have to give security assistance to the PLO, an organization that less than a week ago was considered to be so tainted by terrorism that U.S. diplomats were forbidden even to talk to its leaders.

Under the terms of the self-governing plan, the Palestinians will be responsible for providing police protection in areas under their control, first in Gaza and Jericho and later in most of the Arab population centers of the West Bank.

There seems little doubt that the biggest threat to the Palestinian police will be radical Palestinians, probably led by the Islamic fundamentalist group Hamas, who oppose the peace pact because it abandons the Palestinian goal of regaining all of the former Palestine mandate, including the land that is now Israel. Nobody knows just how it will be done, but officials say the United States must support the PLO against its violence-prone Arab opponents.

Nevertheless, the top priority right now is money.

Taking a cue from the George Bush Administration, which sought pledges around the world to pay the cost of the Gulf War, Secretary of State Warren Christopher has asked for contributions from Saudi Arabia and other oil-rich Arab states, Japan, members of the European Community and Scandinavian countries such as Norway, the broker of the Israel-PLO agreement.

Officials are hopeful that these countries will come through, but nobody knows for sure until the checks are cashed.

When Israel and Egypt signed in 1979 what is still the only formal Arab-Israeli peace treaty, the United States agreed to pick up just about all of the cost.

In addition to some expensive construction projects early in the process, the United States continues to provide a combined total of $5 billion a year in foreign aid to the two nations, making them by far the largest U.S. aid recipients.

But officials say that won’t happen this time.

“If you go back to Camp David, we had a bipolar world,” a senior Administration official said. “Many of the Europeans were highly sensitive about their relations with the Arab world, and Egypt at the time was being ostracized . . . by the Arab world. So you really didn’t have many others who could be contributing. Now we have a different world. . . . We have reason to believe that the Gulf states, especially at this point, are looking with a lot more interest and understanding of the importance of seeing (the Israel-PLO) agreement succeed.”

The Israel-PLO agreement is of vital importance on its own terms, of course, although it directly affects fewer than 8 million people squabbling over one of the few slivers of Middle East real estate that doesn’t have much oil or other natural resources. But the indirect implications of the agreement are enormous.

For decades, the Israeli-Palestinian dispute has been regarded as the core of the wider Arab-Israeli conflict. If Palestinian self-government works, it is almost sure to lead to an early peace treaty between Israel and Jordan. A bit further off but now suddenly within range is peace between Israel and both Syria and Lebanon.

And beyond the inner ring of Arab states that have territorial disputes with Israel, the rest of the largely Arab and Muslim Middle East is anxiously awaiting the results of the West Bank and Gaza experiment.

The Middle East as a whole is a region amply blessed by nature with abundant oil, adequate water and almost unlimited economic potential.

But for most of the last half century, comprehensive regional development projects have been hamstrung by the refusal of the Arabs and other Muslims to deal with Israel.

For instance, the Turkish government is pushing a massive water resources project for the region, which would use Middle Eastern oil money to pay for capturing Turkey’s surplus water and distributing it to the rest of the countries in the region, most of which face severe water shortages.

However, the plan foundered because Arab states said they would boycott a planning meeting if Israel was invited. The Turkish government tried to finesse the issue by asking the Israelis to participate only on an unofficial basis, but Israel refused and the United States withdrew its support.

The plan was shelved, although it can be revived if the Arabs decide to do business with Israel.

In 1986, Shimon Peres, then Israel’s prime minister, proposed a $20-billion to $30-billion “Marshall Plan” for the Middle East to channel money from both within the region and from outside donors into economic projects that would improve the quality of life in the area and promote peace by fostering Arab-Israeli cooperation.

The United States endorsed the plan, but it died quietly in the face of continuing Arab-Israeli hostility.

Ever since the 1991 Madrid peace conference, Israel, most Arab nations and a variety of outside powers such as the United States, Japan and the European Community have been meeting in a series of largely overlooked multilateral conferences covering subjects such as water, economic development, arms control and refugees.

U.S. officials expect the Israel-PLO agreement to inject new life into these talks, which could evolve into major regionwide development programs.

Seeking a Homeland

There are nearly 6 million Paestinians worldwide. 1.7 million of them live in the West Bank, Gaza Strip and East Jerusalem.

Israel: 730,000

The occupied territories

West Bank/East Jerusalem: 1,075,531

Gaza Strip: 622,106

Jordan: 1,824,179

Lebanon: 331,757

Syria: 301,744

Other Arab countries: 445,195

United States: 200,000