The 400-page accord, which details Israeli troop withdrawals, Palestinian elections and the creation of a ruling council, will be formally signed by Yasser Arafat, the PLO chairman, and Yitzhak Rabin, the Israeli Prime Minister, before President Clinton in Washington next Thursday.
The agreement aims to produce "co-operation and co-existence" between Israelis and Palestinians, who have been in conflict for most of this century. Palestinians move significantly closer to their goal of an independent state though the territory they will control will be, at least at first, very limited.
Israeli troop withdrawal from the first of six cities on the West Bank will start almost immediately, in early October. Palestinians hope to hold elections in January for the 82-member council which is to rule the 2.1 million people in the West Bank and Gaza.
Shimon Peres, the Israeli Foreign Minister, who spent the last eight days in exhausting negotiation with Mr Arafat in the Egyptian Red Sea resort of Taba, said as the agreement was being initialled that the two sides now had a real chance to "change the course of hopelessness and desperation and blood into something more promising, more noble, more humane". Mr Clinton said: "It's a big step forward toward ending a long, long state of siege in the Middle East."
Reactions are likely to be mixed. Many Palestinians fear they are being fobbed off with a number of "Bantustans'' that can easily be sealed off by the Israeli army, as has happened with Gaza and Jericho, which gained autonomy last year. Israelis on the right fear that the enclaves from which their forces are withdrawing will be safe havens for Palestinian guerrillas to make attacks.
Mr Rabin is eager to reassure Israelis that he is not compromising their security by offering Palestinians self-government. His popularity plummeted after Islamic militants began a campaign of suicide bombs against Israeli targets. It is likely, however, that the Israeli Knesset (parliament) will approve the accord by a narrow margin.
In Hebron, the Palestinian city to the south of Jerusalem, where the presence of 400 militant Jewish settlers in heart of a city with a population of 120,000 was a major obstacle to the accord, Palestinians will be disappointed that the settlers are not to be removed. Israel refuses to uproot any settlers from the West Bank or Gaza until the final phase of the peace negotiations which are due to start in May next year.
Mr Arafat has been keen to get a foothold on the West Bank, which Israel conquered in 1967. He may move to Ramallah, north of Jerusalem, next year, before the Israeli elections in October 1996.
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