Israel, Palestinians Set July Pact Deadline : Mideast: Agreement on negotiations to extend self-rule in the West Bank called a breakthrough.

Ending weeks of stalemate, Israel and the Palestinians agreed Thursday to finish by July 1 their oft-delayed negotiations on extending Palestinian self-rule throughout the West Bank.

Israeli Foreign Minister Shimon Peres, who negotiated the agreement with Palestine Liberation Organization Chairman Yasser Arafat, called it a breakthrough. Arafat said only “wait and see,” though he expressed hope that the decision will lead promptly to a complete agreement.

The step came just hours before Secretary of State Warren Christopher arrived to try to revitalize Israel’s peace negotiations with the Palestinians and Syria.

The Peres-Arafat accord was the sort of incremental movement that would have let Christopher claim success for his weeklong trip, if he had been present.

As it was, he was left to congratulate Peres and Arafat for “unblocking the negotiations.” Other senior U.S. officials said that, despite the action, “there is still a lot to be done.”

The agreement raised the stakes for talks Christopher plans to hold today with Arafat in the Gaza Strip.

U.S. officials said Washington will be called on to provide some of the economic payoff that will make the measure look attractive to the Palestinian public.

A senior American official said the United States intends to finance a few large-scale road, sewer and other infrastructure projects that will have an immediate impact by creating jobs in the impoverished Gaza region. He said that international aid was earlier diffused into small projects.

In their 90-minute meeting Thursday at Erez, the checkpoint between Israel and Palestinian-controlled Gaza, Peres and Arafat agreed to create a joint security committee to focus efforts of the governing Palestinian Authority in the fight against terrorism.

In exchange, Israel agreed to “confidence-building measures” aimed at giving the Palestinian public a greater stake in the peace process.

*

Israeli Prime Minister Yitzhak Rabin told reporters after meeting with Christopher that the agreement was “a test for both sides--to the Palestinians to prove their capability to cope with terrorism from their own territories . . . (and) to us, with them, to reach an agreement that will meet the goal” of Palestinian self-rule.

Arafat said after his session with Peres: “I would like to stress that we fully understand the security concerns of Israel. We are doing all we can in regards to this concern. It should be understood that the Palestinian police (are) the sole side responsible for security and order in the self-rule area. We will continue to confront all attempts to disrupt order and security.”

From the Palestinian standpoint, the July 1 target provides a standard by which the peace agreement can be judged.

“This is the first time that we are setting a date,” Peres said. “I would consider it as a breakthrough in the second stage of our negotiations.”

Most important of Israel’s confidence-building gestures was a decision to increase the number of workers allowed to enter Israel to 22,000 by early next week and to immediately open safe passages for Palestinians between Gaza and the West Bank town of Jericho, the two areas under PLO control.

Israel and the Palestinians worked out an accord on the safe passages months ago, but Israel has never implemented it.

Peres also promised that an Israeli committee, established to select Palestinian prisoners to be freed from Israeli jails, will resume deliberations next week.

“Israel made promises that we hope it will keep, promises and commitments on very important issues,” Arafat spokesman Nabil abu Rudaineh said. “Things look good, at least they seem to finally be moving.”

Arafat told reporters that he hopes to iron out more differences in a meeting “as soon as possible” with Rabin.

Peres said the session will come in the next two or three weeks.

After his talks with Christopher, Rabin was uncharacteristically upbeat in assessing Israel’s stalemated talks with Syria.

Addressing Christopher, he said: “I believe your mission here will bring about the resumption of negotiations . . . with Syria and Lebanon. . . . We are capable of achieving peace with Syria. We want to achieve peace with Syria.”

Christopher responded: “If there’s a willingness--and I believe there is--on all sides to address each other’s needs, I think we can make great strides.”

Meanwhile, Christopher said he plans to meet Russian Foreign Minister Andrei V. Kozyrev in the next two weeks to try to refurbish strained relations between the former Cold War enemies.

Other U.S. officials said the talks will be in Geneva and will focus on setting a date for a summit between President Clinton and Russian President Boris N. Yeltsin.

*

Yeltsin wants Clinton to come in May during Russia’s celebration of the Allied victory in World War II, but Christopher and some other U.S. officials have said they are reluctant for Clinton to visit Moscow as long as the conflict in Chechnya continues.

Israeli-Palestinian negotiations had gone nowhere since Jan. 22, when Islamic militants bombed a bus shelter, killing 21 Israelis.

Israel responded by barring Palestinians from entering Israel from the territories and by looking for ways to make that ban permanent. It also suspended measures previously agreed to, such as the safe passages and release of Palestinian prisoners.

The Palestinians, in turn, declared the peace process in deep crisis and sent emissaries around the globe, trying to build international pressure on Israel to resume talks.

Israel and the Palestinians agreed in a September, 1993, declaration signed on the White House lawn that Palestinians would hold elections in July, 1994, and that Israel would redeploy its troops out of towns and villages no later than the eve of those elections.

But that timetable fell by the wayside as Israeli concerns grew about Arafat’s ability to enforce law and order in Gaza.