ROAD TO MIDEAST PEACE : West Bank Awaits Self-Rule With Hope, Dread : Administration: The Palestinian Authority has not delivered on most of its early promises. After a year, one village still waits for a garbage truck.

BEITUNIA, Israeli-Occupied West Bank — Across this rocky land, Israel’s long-delayed hand-over of expanded authority to the Palestinians is stirring a powerful mixture of hope and dread among the people Yasser Arafat will soon govern here.

Hope because at last, Palestinian self-government is reaching center stage, after 16 frustrating months of its rule over the distant Gaza Strip and the tiny, isolated West Bank town of Jericho.

Dread because Palestinians know the myriad problems awaiting Arafat here and fear that his Palestinian Authority may not be able to handle its added responsibilities.

The West Bank offers Arafat a million more Palestinians to govern, people generally better educated and wealthier than the Gazans among whom he has been living. Even as international organizations point to the West Bank’s relative prosperity and say that the authority’s expansion there will allow the Palestinians to build a viable economy, Palestinians living in the West Bank, and the officials about to move in, focus on the problems that lie ahead.

Palestinians point out that self-rule comes with many strings attached. Arafat is winning not the state that Palestinians yearn for but limited rule over pieces of territory.

He also arrives carrying the baggage of only limited accomplishments in Gaza and a string of broken promises made earlier to West Bank residents, and brings a government engulfed in financial crisis. Palestinian officials say they are unable to carry out ambitious development programs Arafat thought would demonstrate that even limited self-rule can dramatically, materially alter West Bank residents’ lives.

“They promised us so many things,” said Abdallah Rizk Kurd, mayor of Beitunia, a village just a 30-minute drive north of Jerusalem. “The sulta [Palestinian Authority] said that they would clean the sewage system, improve the water system, pave the roads, give us a garbage truck. They didn’t start any of those projects.”

Shortly after the Israeli-Palestinian peace accord was signed in September, 1993, Israel gave Arafat a green light to launch development and reconstruction projects in the West Bank, even though self-government initially applied only to Gaza and Jericho. Arafat promised West Bankers a share of the funds that international donors pledged to get the Palestinian Authority going, and invited them to submit proposals.

Two years later, little of what was promised has been delivered. Across the West Bank, dozens of projects have been delayed or canceled.

In Beitunia, Kurd said he won speedy approval for his projects when he submitted plans to the Palestinian Authority more than a year ago.

But today, Beitunia’s roads are still rutted dirt tracks. Not a spadeful of ground has been turned at the site where the Palestinian Authority promised it would build a reservoir. The village’s 12,000 residents still endure water shortages, and its sewage is still untreated and flowing through inadequate pipes.

Beitunia’s story is repeated in other villages, where schools that the Palestinian Authority promised to help expand are still overcrowded with pupils forced to attend in shifts, and where parks have not been built and roads are still unpaved.

People were tolerant of the delays while Israel’s occupation continued, and the Israeli civil administration remained responsible for municipal budgets, Kurd said. But they expect quick results after the Israelis pull out.

“Once the authority comes in, the sulta will be the only people to go to for help,” he said. “If they don’t come through, I will give them the keys to City Hall and say: ‘I’m not just going to stay here like a fixture.’ ”

Palestinian officials readily acknowledge their poor track record in the West Bank. Delays by donor states in delivering promised financial aid, long closures imposed on the territories by Israel after terrorist attacks, infighting among the various Palestinian ministries and the need to channel money to pay operating expenses and start urgent projects in Gaza all but paralyzed West Bank development plans until recently, officials say.

“We have ignored big towns--Janin, Hebron, Qalqiliya and Tulkarm,” said Abdul Rahman Hamad, director of program and project management for the Palestinian Economic Council for Development and Reconstruction. “We wanted to rehabilitate things so that people will appreciate what we, the sulta, [are] doing.

“But I do not think that people feel a change here from the signing of the [1993] agreement,” Hamad said. “We have done nothing in any of the villages that would make people feel any change in their lives.”

Hamad and other Palestinian officials paint a gloomy picture of the authority’s financial situation and fret openly about the consequences if they don’t start demonstrating an ability to make people’s lives better under their rule than it was under Israeli occupation.

“We are not able to cover essential expenditures for ministries without international aid,” said Anis Qaq, deputy minister for international cooperation in the Ministry of Planning. “All our ministries are facing budget cuts.”

From the beginning of self-rule in May, 1994, the authority channeled the taxes it collected and other revenues into operating costs. Donor funds were supposed to be devoted to projects, but much of that money was redirected--with donor consent--to pay administrative and start-up costs.

In Gaza, hard-pressed Finance Minister Mohammed Zuhdi Nashashibi said he does not know how the authority--which has a projected deficit of $60 million in its $445-million budget for the current fiscal year and is borrowing from the Bank of Palestine to meet its payroll--will be able to afford expansion.

“As we move into the West Bank, we are facing more responsibilities,” Nashashibi said. “The financial implications have started as of today.”

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The Palestinian Authority already employs 30,000 civil servants and 18,750 police and other security officers, he said, but it will have to expand that work force. He said that at least 100 more senior administrators will be hired soon and several thousand more security officers.

But even as Palestinian officials worry, international agencies that have been monitoring the authority’s painful start-up say they are encouraged by its recent performance and convinced that the move into the West Bank will finally make the ministate-in-the-making a going concern.

“The World Bank has long said that the extension of the Palestinian Authority into the West Bank is a necessary condition for achieving economic viability,” said Rick Hooper, spokesman for the United Nations coordinator in Gaza.

Hooper scoffs at skeptics who say that the authority’s meager resources will be wiped out by the move into the West Bank.

“It will cost them more, because there will be a larger public sector,” he said. “But some of the sectors that they are assuming from the Israelis will be revenue-generating. It will give them a better tax base than they have ever had.”

American diplomats express similar confidence that the Palestinian Authority is ready to expand. Armed with an International Monetary Fund report issued in August that praises the authority for collecting more taxes than it had budgeted for 1995 and for beginning to get its costs under control, the United States hosted a second international donors conference in Washington on Thursday. It hopes the gathering will produce fresh pledges of aid to get under way the kinds of projects the Beitunians are looking for.

“We’re very worried about donor fatigue,” said a senior U.S. diplomat, speaking on condition of anonymity. “But Palestinian self-government is beginning to work. They are in better shape than a year ago, when they didn’t want to charge people taxes and they had no revenues.

“Our condition for funding them was that they had to get their tax system in order. Now, their costs are greater, but they are collecting taxes.”

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In 1993, Europe, the Arab states, Japan and other nations pledged more than $2 billion over five years for infrastructure and other projects in Gaza and the West Bank.

After a slow start-up, marred by squabbling between Arafat and the World Bank over just how accountable the authority would be for the donations it received, the money began flowing into Gaza.

Evidence of the donor nations’ support can be seen today in Gaza, where for the first time in decades, children have clean, well-equipped parks to play in and families are receiving grants to rehabilitate homes in refugee camps.

Sidewalks and roads are being paved in downtown Gaza City, sewage pipes and electrical wiring are being laid, and the authority has refurbished a gracious guest house to host official visitors--all with international donations.

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“In the coming phase, you’re going to see more of a balance in investment for the West Bank and Gaza,” Hooper said. “It is very important that the donor funds go to helping establish lasting improvements of the daily lives of people. The donors, we think, recognize that.”

Hamad and other officials say the Palestinian Authority will have to move quickly, once Israel redeploys its troops out of towns and villages and the authority moves in, to restore confidence in its ability to govern and to provide both the basic services and the infrastructure development the West Bank needs.

For the next five years at least, Palestinian officials said, they will have to continue to rely on donations from abroad to fund development projects, while the authority concentrates on building a big enough tax and revenue base to pay its ongoing expenses.

“The international community has to carry out its responsibilities for the coming five years,” said Hamad. “I don’t think that it will be possible for the sulta to manage its affairs without this assistance.”