Israel, Jordan OK Draft Peace Treaty : Mideast: Preliminary accord settles border disputes, provides for two nations to share water. It marks the Jewish state’s second such pact with an Arab neighbor.

Israel and Jordan, accelerating the search for peace in the Middle East, agreed Monday on a draft treaty that settles their border disputes, shares scarce water resources and ensures the security of both.

When the treaty is signed next week and ratified, Israel will be at peace with two of its Arab neighbors, Jordan and Egypt, and strongly pursuing negotiations with Syria and the Palestinians in a sustained effort to bring the Arab-Israeli conflict to an end within the coming year.

“I am full of hope that the future will be a future of peace, that this step will be a very important one (for) a comprehensive peace in this region,” King Hussein of Jordan said.

“Hopefully, it is a fresh beginning and a fresh start,” he continued, alluding to the long refusal of the Arabs to accept the Jewish state--and the many wars that have resulted. “We will guard (this peace), and I hope that the generations beyond us will guard it, enjoy it and cherish it--a peace with dignity.”

Israel and Jordan will establish full diplomatic relations by the end of the year; tourists and business people from both countries will be able to travel back and forth, and Jordan will halt its participation in the Arab boycott of Israel to permit full trade with the Jewish state.

Israeli Prime Minister Yitzhak Rabin, who initialed Monday’s accord along with Prime Minister Abdul Salam Majali of Jordan, called the agreement a “historically unique moment” and praised Hussein’s “courageous decision” in deciding to accelerate the negotiations, not waiting for Syria to catch up.

The treaty will be “a cornerstone for a new Middle East in which peace, development and cooperation will replace animosity, hatred, violence and wars,” said Rabin, who like the king was glowing with pride.

“It is a very important day for our countries and our peoples, but I believe also that it is a source of inspiration, an example that peace is attainable.”

The agreement renewed optimism in the region about prospects for peace after two murderous attacks within Israel by Islamic militants last week. In retaliation, Israel suspended talks with the Palestine Liberation Organization on broadening the Palestinian Authority and holding elections in the Gaza Strip and West Bank, raising serious questions about the course of the peacemaking process.

In Washington, President Clinton said he was “delighted” with the agreement and announced that he will accept a Jordanian-Israeli invitation to witness the formal signing of the treaty, expected Oct. 26 at a spot along the two nations’ desert frontier.

“At a time when hatred and extremism and threatening behavior still stalk the Middle East,” Clinton said, “this agreement reminds us that moderation and reason are prevailing, that nations can put conflicts behind them, that courageous statesmen can lead their people to peace.”

Clinton said he hoped that Israel’s agreement with Jordan will ease the far more difficult negotiations with Syria. “We are continuing to work there and we are encouraged,” he said of the ongoing U.S. mediation. “We just have to keep working.”

Other officials said Clinton will probably also visit U.S. troops in Kuwait or Saudi Arabia. The President may also meet with Syrian President Hafez Assad to promote peace between Syria and Israel, they said, although the scheduling and location of such a meeting has not been worked out.

Clinton will be the first U.S. President to visit Israel since Jimmy Carter in 1979.

In Jerusalem, Israeli President Ezer Weizman said Assad “should look around and see (whether) he may be the last in line” to make peace with Israel.

But Syrian Foreign Minister Farouk Shareh tartly reminded Israel from Damascus: “We hope the Israeli government will realize the fact that without achieving peace with Syria and Lebanon, there will be no peace in the region. . . . This is the reality.”

Although Israel and Jordan signed a nonbelligerency pact in Washington on July 25 and have been working since then to resolve differences standing in the way of a full peace treaty, there were fears among Israelis that Hussein, who had not wanted to get too far ahead of Assad, would hold up a final agreement.

“These are two countries that have large shared areas and a long history of cooperation rather than opposition,” said Asher Susser, a political scientist at Tel Aviv University and a leading Israeli specialist on Jordan. “The treaty reflects that, historically, Israel’s relations with Jordan have always been better than with the other Arabs. . . .

“The treaty consequently has been more a measure of summing these up and giving them formal shape than an arduous negotiation. It was always more a question of timing than of the actual compromises involved.”

Rabin had come to Amman on Sunday evening determined to make as much progress as possible on the draft treaty. He negotiated with Hussein until 3 a.m., slept a few hours in the royal palace and then resumed talks with the king.

“We sat together throughout the night, and the atmosphere remained exceptional,” Shimon Sheves, a senior Rabin aide, said. “The prime minister and the king went through the draft . . . paragraph by paragraph.”

Jordanian Prime Minister Majali and Israeli Foreign Minister Shimon Peres held parallel talks, and the full negotiating teams broke into small groups, worked through the night and then reviewed the 15-page treaty with Hussein and Rabin on Monday morning after breakfast.

Anxious to build momentum in the peace process as a whole, Rabin had already paid two visits here last week and, in an extraordinary move, assigned Ephraim Halevi, the deputy chief of Israeli intelligence, to conduct almost continuous negotiations in Amman.

“Rabin was worried, and maybe the king was as well, that the issues might be talked to death, the negotiations slowed and our whole push for peace dissipated,” a senior Israeli official said.

“The agreement with Jordan will put some pressure on Syria and the Palestinians to keep pace or be left behind. The connection is not so direct, but it is real.”

Susser said that Syria lost its veto power over Jordan and the Palestinians last year in peace negotiations, freeing both to make their own deals. Syria consequently finds itself under pressure, he added, to move ahead and ensure that its interests are not ignored as a new regional balance of power takes shape.

Under the draft agreement, Israel will give back to Jordan farming land in two areas that was seized in the 1948 Arab-Israeli War--and then lease it for a period of 25 years and possibly longer. One area lies between the Sea of Galilee and Beit Shean in the Jordan Valley, and the other is near Zofar between the Dead Sea and the Gulf of Aqaba.

Other land disputes were settled by an agreement to exchange small pieces of territory and establish a proper border--not just an armistice or cease-fire line--between the two countries.

No Israeli community will be uprooted by the agreement, Rabin said.

The sharing of limited regional water resources was resolved with an agreement that Jordan can build a dam on the Yarmuk River before it feeds into the Jordan River, with plans for a second one later, both with World Bank financing. Israel also promised to take Jordan’s needs into consideration when releasing water from the Sea of Galilee into the Jordan.

Jordan claimed Israel was diverting more than its fair share of regional river waters, but Israel said the solution was to enlarge the waters available. “We got all our rights and even more than what we dreamed of,” Jordan’s chief water negotiator, Munther Hadadin, told reporters.

The agreement won quick approval in Israel, even from the right-wing opposition.

“What we all want is real peace,” Benjamin Netanyahu, chairman of the Likud Party, said. “The argument between me and Yitzhak Rabin is not over Jordan, because there we have an entity that wants to live with us, not replace us. The real argument is over the PLO, which wants to replace us in stages.”

There were clear misgivings among Palestinians, who fear that Jordan is trying to supplant the PLO in negotiations with Israel.

“Considering the triangular relations among us, the Jordanians and the Israelis, I believe there are common things, like water resources, that we must consider together,” said Faisal Husseini, a minister in the Palestinian Authority. “Talking about water without having an agreement with the Palestinians is not right.”

Palestinians will also be irritated by the way that the draft treaty reaffirms Israel’s respect for Jordan’s traditional role as the guardian of Islamic holy places in Jerusalem and thus puts Jordan into negotiations on the city’s future.

The treaty will make Jordan the second Arab country formally at peace with Israel. Egypt, in 1979 the first to make peace, was ostracized for more than a decade, and President Anwar Sadat was assassinated in 1981 by Islamic militants angered by that treaty.

Times staff writers Robin Wright and Doyle McManus in Washington contributed to this report.

Terms for Peace

Israel and Jordan have reconciled their differences, paving the way for a peace treaty between the two countries.

What was agreed on:

* Israel will give some of the land it captured in 1948 back to Jordan but will lease areas that have Israeli settlements or farms.

* Other land disputes will be settled by swapping territory.

* Both sides have agreed to begin water projects on the Yarmuk River.