Israel and PLO Reach Partial Autonomy Pact : Mideast: Peres and Arafat also report progress on toughest issues: border control and size of Jericho area.

After months of haggling that threatened to paralyze hopes for Palestinian self-rule, Israeli and Palestinian negotiators Wednesday concluded three days of marathon talks and signed a preliminary agreement that overcomes many of the biggest obstacles to Palestinian autonomy.

Following an exhausting round of all-night sessions that threatened to collapse at the last moment, Palestine Liberation Organization Chairman Yasser Arafat and Israeli Foreign Minister Shimon Peres initialed an accord on a wide range of issues--from the operation of the new Palestinian governing authority to security for Jewish settlers in the Gaza Strip.

The two leaders said they also made progress on two of the most difficult issues plaguing a peace agreement: the control of international border crossings and the size of the area around the West Bank town of Jericho to be transferred to Palestinian authority.

But a final agreement on both issues, which have bedeviled the talks since mid-October, proved elusive, and the two sides said they will continue negotiating until Arafat and Israeli Prime Minister Yitzhak Rabin meet to sign a final agreement. Egyptian mediators said they hoped that meeting will take place “in the very near future.”

In Washington, President Clinton praised the negotiators’ work. “Another big milestone has been achieved today,” Clinton said in remarks to Jewish leaders from around the world.

But the failure to conclude a final understanding on the two critical issues was an obvious setback for Arafat and Peres, who had hoped to pave the way for a comprehensive agreement that would permit the beginning of Israeli withdrawal from Jericho and the Gaza Strip.

Both sides emphasized, however, that major hurdles had been cleared, including the extremely controversial issue of security protection for Jewish settlers in the Gaza Strip, an issue Peres said was resolved by dividing the region into three separate zones.

“We didn’t complete our work, but we overcame very, very difficult issues,” Peres said. “We took five or six of the most complicated issues between two peoples. We could have gone the Bosnian way--to shoot, to fight, to kill. Instead, we went our way--to agree to find common grounds, to tell the Palestinian people, tell the Israeli people, that we are serious, we are credible, we are not looking for images and public relations, we are looking for real peace for all children in the Middle East, Arabs and Jews.”

Arafat, who like Peres looked tired and subdued as he signed the agreement known as the Cairo Document, said: “We consider what we have done the last three days a major step for the implementation of the (Declaration of Principles) which we have signed in Washington. I hope very soon we will be able to meet together in Jericho.”

The agreement, which was not immediately made public, is said to contain two documents, the first a three-page discussion of principles for Palestinian self-rule, the other an eight-page recitation of the points of understanding on some of the most difficult security issues, including the border crossings and the management of Jericho and the Gaza Strip.

The two leaders said negotiating teams will continue meeting in Egypt to try to work out the final points so that Arafat and Rabin can sign a final accord. Sources close to the talks said such an agreement is at best several weeks away.

Apart from economic talks still going on in Paris, the key security issues remaining include the size of the Jericho area to be governed by Palestinians. Negotiators in Cairo apparently were able to agree on several areas outside Jericho proper that Palestinians have sought to include in their zone of authority, but the overall size of the district remains a point of contention, sources close to the talks said.

In addition, the two teams were able to reach only partial agreement on control of international border crossings into Egypt and Jordan. There still remains a dispute about whether a Palestinian officer will stand at the border, the sources said.

Both of these could be major issues; Arafat feels he cannot sell an already unpopular peace plan to his people if the size of the areas for Palestinian self-rule is minuscule. Moreover, Palestinians feel they need to relieve the humiliation that many Palestinians experience when undergoing Israeli scrutiny at international border points. Israel, for its part, says it cannot compromise its security by handing over border controls to Palestinians.

Peres, apparently making a reference to these concerns, said each side has become aware of the other’s priorities and sensitivities. “Before we came to Cairo, Chairman Arafat said that he would respect the security needs of Israel, and surely we cannot compromise on our security. On the other hand, we have announced that we shall do whatever we can to introduce an air of dignity and respect for the Palestinians,” Peres said.

“I know the people of Israel are seriously and deeply interested in making peace a reality. I’m convinced that historically and morally, we do not want to be the dominating force of the Palestinian people.”

Yet for all the goodwill, the talks were strained by the press of time, the failure to meet an original Dec. 13 deadline for beginning Israeli troop withdrawal and the collapse of a tentative accord that Arafat and Peres thought they had reached recently in Davos, Switzerland.

The negotiating teams met on both Monday and Tuesday nights until 3 a.m., with Arafat and Peres sitting through at least seven grueling sessions. Palestinian leaders emerged from one of the last sessions Wednesday afternoon with an announcement that an agreement was imminent, only to find the talks near collapse during a last-minute session on details Wednesday evening when Israel reportedly accused the Palestinians of reneging on an earlier agreement, according to some sources.

Israel Radio reported that Egyptian Foreign Minister Amir Moussa had to intervene when Arafat was angered that Peres had to check with Rabin in Israel for final authority to sign the agreement. Peres, infuriated, walked out of the room at one point, the radio reported.

Yet the decision finally to sign an accord on the points agreed on and leave the others until later reflected the realization on both sides that backing away from the peace process at this point is not an easy option. Both sides, Peres said, realize they are sailing uncharted waters.