NEWS ANALYSIS : U.S. Has Chance to Redefine Arab Ties : Diplomacy: Helping Palestinians get established in Jericho and the Gaza Strip could offer political benefits.

After almost half a century of tension with the Arab world over the Palestinian issue, the United States has a historic opportunity to redefine its relationship with the 22-nation bloc by helping the new Palestinian entity get established in Jericho and the Gaza Strip.

As the Clinton Administration scrambles to sort out its role--thrust upon it suddenly by the abrupt breakthrough resulting in an agreement on Palestinian self-government in those areas--experts are pushing for wide-ranging assistance from private and public sectors.

The list includes everything from help with monitoring the first election for the Palestinian Council and technical assistance with agricultural diversification to advice on education reform and even health care management. The United States in turn could reap major political and economic benefits, and not only from Palestinians, they contend.

Although it was overshadowed Monday by the handshake agreement between Israel and the Palestine Liberation Organization, the equally unprecedented encounter between an American President and the PLO leader laid the groundwork for what could be a pivotal new link. The two sides now share a common interest in securing the foundation for the Israeli-Palestinian accord.

That budding relationship also could influence regional dynamics, including longstanding anti-Western Arab postures and suspicions and the vibrant Islamist movement that is considered a major challenge to both PLO and U.S. interests.

“By helping implement the specifics behind this agreement, the United States can show other Arab countries and peoples that we really do support human rights and popular governments,” said Thomas R. Mattair, an analyst with the Middle East Policy Council, an institute based in Washington. “That should stem historic antagonism and make it easier to avoid having to deal with a growing new enemy like militant Islam.”

On Wednesday, Clinton telephoned Syrian President Hafez Assad and urged him to use his influence to restrain radical Palestinian opponents of the Israel-PLO agreement. In a 40-minute conversation from Air Force One--Clinton’s second call to Assad since the pact was announced last Thursday--Clinton said that a comprehensive peace in the Middle East is possible with Syria’s support.

“I very much want to see an agreement between Israel and Syria, and I want to emphasize my personal commitment to making progress on all fronts of the peace process,” Clinton told Assad, according to White House Press Secretary Dee Dee Myers.

Another Administration official said that implicit in the President’s words was a plea to Assad to hold in check Damascus-based radical Palestinian elements who have vowed to block a peace settlement with Israel.

Clinton “suggested that it is imperative for progress on the Syrian track as well as broader Middle East peace efforts that Assad support the Israel-PLO agreement and prevent its disruption by extremism on either side,” the official said.

Two of the most important and feasible options the Administration faces at the diplomatic level are trying to help Israel and the PLO sort through a host of logistics problems on the ground and pushing confidence-building measures.

During the transition in the West Bank, for example, Palestinians will not have sole authority over critical issues such as housing, zoning and industrial development. Either Israel or a joint committee will have primary say, according to Peter Gubser, president of American Near East Refugee Aid, a private aid group based in Washington that has been involved in the West Bank and Gaza Strip since 1968.

Since Israel’s 1967 conquest of the West Bank, zoning restrictions have severely limited Palestinian construction. Determining simple things such as what can be built where is likely to require delicate mediation.

In general, U.S. mediation will be critical in breaking down longstanding barriers during the transfer of power. “The Norwegians are to be lauded for what they did, but now only the United States can keep this going,” Gubser said.

In a similar vein, a Washington role will be needed to help remove legacies of the conflict--from Palestinian violence to Israel’s deportations, house demolitions, school closures and censorship--that are “no longer compatible with the spirit of the times,” according to Mohammed Hallaj, head of the Palestine Research and Education Center in Washington.

At a political level, private think tanks and quasi-government groups like the National Endowment for Democracy, which receives U.S. funding, will be needed to promote democratic activities during the early elections, just as many are now doing in Eastern Europe.

Former President Jimmy Carter reportedly offered to help, as he has in monitoring elections elsewhere, during talks with PLO Chairman Yasser Arafat and other PLO leaders this week.

“We’re talking about restructuring a society. As a result of the intifada (uprising) and the repressive reaction to it, Palestinians went through a collapse of national institutions. In many areas, they have to be rebuilt from scratch,” said Khalil Jahshan, executive director of the Washington-based National Assn. of Arab-Americans.

The infrastructure--roads, sewerage, communications and water system--is not much better than it was in 1967, Gubser said.

“The education system needs revamping. The banking system needs to be modernized, while communication is also antiquated,” Jahshan added. “And the water system is so polluted in Gaza that it now has one of the highest rates of kidney failure in the world.”

The Palestinian economy--largely agricultural and confined to a local market--needs to be totally overhauled and adapted to regional and international markets, said Ann Lesch, a political scientist at Villanova University in Pennsylvania and author of an American Academy of Sciences study on Palestinian self-rule.

And textile and furniture companies, usually subcontractors to Israeli firms, need help in becoming independent businesses, Lesch said.

Jobs will have to be created to absorb the enormous number of unemployed, estimated to be as high as 56% in Gaza and much more than 20% in the West Bank, Jahshan said.