NEWS ANALYSIS : Israel, Palestinians Face Test of Trust : Mideast: Path to peace poses tougher challenges as it winds down to the most perplexing issues.

Beyond its timetables, legal language and technical detail, the new peace agreement between Israel and the Palestinians is supposed to rekindle a long-lost commodity: trust.

Will it?

Clearly, the relationship between Israeli Prime Minister Ehud Barak and Palestinian Authority President Yasser Arafat is a dramatic improvement over the contemptuous dealings that Barak’s predecessor, the right-wing Benjamin Netanyahu, had with Arafat and his associates.

Israeli and Palestinian officials chatted amiably and slapped mutual backs before the middle-of-the-night signing over the weekend of the revised Wye accord, which sets a one-year timetable for a permanent solution to decades of conflict.

But as suspected terrorist bombings just hours later underscored, the new relationship will be tested at every turn.

In driving a hard bargain that the Palestinians largely--if grudgingly--accepted, Barak succeeded in consolidating his clout as a regional leader. But some analysts suggest that his stubborn stance squandered a measure of the goodwill that initially greeted his landslide election in May.

Arafat, meanwhile, infuriated his Israeli partners with last-minute demands and tactics that left Israeli negotiators grumbling about the sincerity and honesty of the Palestinians.

And yet these past weeks of negotiation, which produced the so-called Wye II accord signed early Sunday, were a breeze compared with what will come next, as the two sides embark on a tortuous quest for solutions to the most perplexing issues facing their peoples.

Trust and faith in the peace process--eroded by a lengthy stalemate--will be built only as Israelis and Palestinians see the results.

This is especially true for Palestinians, who are the most keenly disappointed in what peace talks have gotten them: a patchwork quasi-state with borders still controlled by Israel and a dependent, choked economy.

“The Palestinian people are not going to be generous, either to Barak or to Arafat,” said analyst Khalil Shikaki, director of the Center for Palestine Research and Studies in the West Bank city of Nablus. “They’ve been disillusioned time after time and won’t set themselves up for further disillusion.”

Many Palestinians put Arafat on the losing side of the new Wye equation. By agreeing to yearlong negotiations over “final-status” issues, such as borders, refugees and who will get Jerusalem, he has forfeited what had been his one easily wielded threat: unilateral declaration of a state. Under the accord, he cannot declare a state before the end of the negotiation period, September 2000, if then.

His hands tied on the question of statehood, Arafat does not appear to have achieved anything explicit to freeze the expansion of Israeli settlements in the West Bank, another matter of great consternation to Palestinians.

To the biggest doubters, the emerging relationship remains one of the occupied and occupier.

“Barak dictates,” said Mahdi Abdul Hadi, director of the Palestinian Academic Society for the Study of International Affairs, an East Jerusalem think tank. “Arafat is pressured for time and is willing to deliver anything.”

At least on the surface, in the view of many Palestinians, what Barak was doing during talks that began as soon as he was sworn in as prime minister July 6--negotiating changes to an already negotiated deal--is exactly what Netanyahu used to do. This created lingering suspicion among both ordinary Palestinians and senior officials.

Still, seeing faithful implementation of the agreement, and authentic change on the ground, can have “a magical effect” on people’s attitudes, Palestinian political analyst Ghassan Khatib said.

“At the end of the day, what counts to the public is whether they see the Israeli army withdrawing, and whether they see [Palestinian] prisoners being released,” he said. “Then, it won’t matter how little, how late. The impression will be that things are moving in the right direction, no matter how slowly.”

Arafat, 70 and ill, signed the agreement because he knows his own time is limited, and, with the Netanyahu experience fresh in his memory, he knows how much more intransigent and unreliable than Barak a negotiating partner can be. He needs to give something to his people if he hopes to maintain domestic stability.

He also gains from the revised Wye deal. He gets the same percentages of West Bank territory, but Barak has offered him “quality” land, parcels that are more contiguous and arable. He gets freedom for 350 Palestinian prisoners, maybe more.

He gets firm commitments on an economically strategic harbor, which will allow the Palestinians to trade more directly with other countries, and “safe-passage” routes that will finally permit travel between the Gaza Strip and West Bank for ordinary Palestinians, some of whom have not seen their relatives in years.

Barak gets specific target dates for tackling the tough issues that remain. He succeeded in forcing the Palestinians into future negotiations over those issues before they have been given their last installment of land.

He also gets redemption for Israel, whose relations with Washington and other capitals soured under Netanyahu. During that period, Arafat seized the opportunity to improve his own international stature and enjoyed seeing Israel blamed for most of the stalemate in the peace process. The situation will change now, in Israel’s favor.

With the notable exception of the right wing and Jewish settlers, Barak’s Israeli audience is giving him generally high marks for what one commentator called his Don Corleone, take-it-or-leave-it style.

“Barak, who in normal days hardly suffers from a lack of self-confidence, can awaken [after sealing the deal] with the feeling that he has a Midas touch,” commentator Hemi Shalev wrote in the Maariv newspaper.