PERSPECTIVE ON ISRAEL : Time Runs Short for Peace Process : The agenda needs some agreement with Palestinians that would survive a potential return of Likud in ’96.

Recent Israeli polls indicate that if an election were held today, Likud Party leader Benjamin Netanyahu would defeat Prime Minister Yitzhak Rabin and the progress made thus far toward ending the Israeli-Palestinian conflict would count for naught.

With this in mind, and in response to the continued difficulty of negotiating interim status arrangements with the Palestinians, Deputy Foreign Minister Yossi Beilin has proposed that Israel use the time that remains in Rabin’s term to negotiate a final agreement with the Palestinians.

Rabin has rejected Beilin’s advice and seems determined to push on with the effort to implement the Gaza-Jericho interim accord. His reluctance to jump to final-status negotiations is understandable. Israelis would then have to confront some very difficult issues: the return of Palestinian refugees, Palestinian sovereignty over much of the West Bank, a compromise on Jerusalem and the dismantling of settlements in the territories.

Rabin quite reasonably doubts that agreement with the Palestinians could be reached well before the 1996 elections, and having such hot issues pending at election time is a sure formula for a Likud victory.

In short, it is--or seems to be--too late.

At the same time, Yossi Beilin’s concerns are very well taken. When the Likud was in power, it used its time in office to create “facts on the ground.” The Likud government rushed forward with the expansion of West Bank settlements in the belief that even if Labor came to power, it could not reverse the process of de facto annexation. Labor did return to power, but has done nothing that would impede a Likud successor; indeed, on Rabin’s watch the settler population in the territories has increased by at least 10,000.

The situation is made even more bleak by the extreme vulnerability of the peace process to terrorist incidents, such as the bus bombing in Tel Aviv in October or the massacre in Hebron last February. Concerned for his own political survival, Rabin has made it clear to Yasser Arafat that proceeding on even the interim accord will require much tougher action against the radical Hamas. Yet when Arafat’s Palestinian police confronted Hamas demonstrators in November, the result was a slaughter in which a dozen demonstrators died and more than 100 were wounded. That did not increase Israeli confidence in proceeding with troop withdrawals from the West Bank, and further estranged Arafat from a large segment of the Palestinians.

There is no easy answer, but Rabin can do better than muddling along, hoping that luck will hold through the next electoral role of the dice. What follows is a series of steps that are bold but politically possible; if taken, they would advance the peace process, strengthening both Israeli and Palestinian moderates.

* Israel would agree to the establishment of a Palestinian state with sovereignty over Gaza and Jericho, with which it would negotiate the remaining issues, including the extension of Palestinian sovereignty to West Bank territory.

* The Palestinians would dissolve the Palestine Liberation Organization, muting the issue of its covenant, which calls for the destruction of Israel, and replacing the PLO with a national government constitutionally committed to peaceful coexistence, an ideal espoused in the 1988 Palestinian Declaration of Independence.

* The new government would extend citizenship to all Palestinians, whether they were living in territory under its effective sovereignty, in territory of claimed sovereignty or in the Diaspora.

* As agreed to in the Gaza-Jericho accord, Israeli forces would be redeployed away from Palestinian communities in the West Bank. And the Palestinians would conduct elections, not for an interim authority but for the national government.

* Drawing on its new authority, the Palestinian government would use its full resources as a sovereign state to prevent Palestinians from planning or carrying out attacks on Israelis.

* While negotiations on the final disposition of settlements would be deferred, Israel would move to reduce the size of the settler population by undertaking a generous program of financial incentives to induce settlers to leave the territories.

* And the United States would support the admission of the new state of Palestine to the United Nations.

All of this could be accomplished well before the Israeli elections scheduled for mid-1996. The thorniest negotiating issues would be postponed, but if Likud does return to power, there will at least be some “facts (of peace) on the ground” not easily swept away.