PERSPECTIVE ON THE MIDEAST : This Peace Has a Chance to Sideline the Spoilers : An evolving new order of prosperity and liberalization in the Arab world will lessen the appeal of radicals.

The Rabin-Arafat handshake on the White House lawn marked a watershed in the Middle East, but will it hold? And what transformations will the Israeli-Palestinian peace process bring throughout the region?

The Palestine Liberation Organization has been ready to talk ever since December, 1988, in Stockholm, when Yasser Arafat recognized Israel’s right to exist within secure boundaries. That statement led to the establishment of diplomatic relations (suspended two years later) between Washington and the PLO. Jordan has long since been ready for peace, but could not act in isolation. Thus, since 1989, the only remaining piece to fall into place was Israel itself. But as long as the Likud Party was in power, peace was not within reach.

Today’s emerging peace is almost sure to hold, given its solid foundation in the evolution of regional politics over the past four years. The only state still posing major and serious objection is Iran, through its significant support to the radical Islamist organization Hamas. But the peace process and its momentum far exceed Iran’s ability to block the deal.

Who are the chief spoilers to watch? Within Israel, the ideological right wing of Likud; among the Palestinians, the fundamentalist Hamas and radical nationalist groups historically supported by Syria. But as the Palestinians move toward statehood, the leaders of the new state will have every incentive to blunt the action of extremists. Israeli and Palestinian intelligence organizations will surely work hand-in-glove.

Syria has always been a spoiler. Hafez Assad still feels ambivalence about giving up the role of leader of the rejectionist camp, for being the Soviets’ surrogate profited him mightily for many decades. But Assad wants the Golan back; the price, appropriately, is full peace and normalization with Israel--meaning being able to drive from Haifa to Damascus for lunch and shopping in one day. Assad will strike the deal because he can’t afford to be left out of the new order. But, typically, he will allow Palestinian radicals and rejectionists to continue to reside in hotels in Damascus as valuable cards to play in future Palestinian politics.

Syria also is concerned about a new Palestinian state’s likely eventual federation with Jordan and even with Israel, in a kind of Benelux arrangement. Palestine needs Israel even more than it needs Jordan, for jobs and an outlet to the sea. This three-state federation will be a powerful entity in the area, one that Syria wishes to influence, even if it can no longer prevent it.

Like the collapse of communism, the Israeli-Palestinian peace settlement will create other spin-off effects around the world that are hardly fully grasped yet. First, a settlement of longstanding Palestinian grievances--the single most obsessive Arab issue for nearly half a century--will take away one of the favorite rhetorical devices of dictators and radicals, who have exploited this (very real) issue to their own ends to justify the police state, “eternal vigilance,” extremist ideology, the garrison state, saber-rattling and even war. With the Palestinian issue muted, there will be far less justification for radicalism and suppression of democratic aspirations in the name of vigilance. All regimes will come under pressure to liberalize as the threat of war recedes.

With the weakening of the centralized police state, economies, too, will be under greater pressure to liberalize. Dictators dislike free markets, for they create new sectors of power and weaken centralized decision-making. A Middle East whose economies (including Israel’s) are heavily oriented around ponderous and ineffective state-owned enterprises will be under pressure to privatize. There is hope that with the gradual opening of borders, new forms of vibrant economic relations will come into being in the region, where trade among its members has long been scarce.

None of this will make Islamic fundamentalism go away. Its agenda will still have appeal in seething rhetoric against existing Arab regimes for their lack of any legitimacy won at the polling place, and for oppression of their own peoples as well as their incompetence at meeting social needs. In this respect, Islamists join liberals in a call for more open government. With some liberalization and prosperity, fire-breathing Islam will fade to a marginal force.

As welcome as the prospects for democratization are, in the short term, these aspirations in the region will initially be destabilizing, for they seek to build a new order in which old elites will be displaced. Indeed, most will be swept away; ironically, King Hussein may be the exception, for Jordan has embarked on a remarkable new democratic course, including co-optation of the fundamentalists, scarcely matched in most other Arab states. Over time, a new fault line in politics will emerge between the newer democratizing states and the older orders who may yet look back wistfully on the simplicity of the old Arab-Israeli conflict.

No, the millennium is not coming in the Middle East any time soon, even to this region of prophets. Old interstate animosities such as between Iran and Iraq will still pose danger. But the environment within which Middle East politics works itself out will gradually become far less supercharged. It will enable more moderate forces to emerge.

The problem in the region, after all, has not been simply ethnic rivalry and hatred, but the exploitation of rivalries and grievances by cynical power-seeking forces. Yitzhak Rabin and Yasser Arafat, with their first handshake, may have begun the process of dismantling the dangerous old order and unleashing a whole new series of events, many of them unforeseeable.

The forces of change have been long dammed up by the Arab-Israeli conflict; their release had to come. The great art will be to know how to ride with them and channel them in positive directions.