'Give them their own state,' say Israeli employers: The decision to keep out Palestinian workers has had a big impact on local attitudes

RAFI AZULI, an Israeli restaurant manager, took a call from the Israeli- occupied Gaza Strip yesterday. His three Palestinian workers rang to say they would not be returning to their jobs washing dishes at Chez Reno's on the sea-front at Bat Yam, a working- class Tel Aviv suburb.

It is a month since the authorities closed off Israel proper to Palestinians from the occupied West Bank and Gaza Strip after a spate of Palestinian attacks on Israelis. Since then, the workers have been barred from reaching Bat Yam, just 20 miles north of Gaza. In recent days Yitzhak Rabin, the Israeli Prime Minister, has relaxed the entry restrictions, but now these Palestinians do not want to return to their work in Israel.

'They said they were under pressure not to return from other Palestinians in Gaza. They were frightened about retaliation against them if they came back. It is sad. They have been with me for 10 years. They were professionals and its hard to find Israelis to do this work. But it is probably for the best. Personally, I think it is time they were given their own state,' said Mr Azuli, a Moroccan- born Jew, as he served the spaghetti himself.

If Mr Rabin wants advice about what to do next, he could walk along the sea front at Bat Yam: 'Give them their state' is the new consensus in this neighbourhood of largely Sephardi or Middle Eastern Jews. Only a year ago, residents here were in the streets shouting 'kill the Arabs' after Helena Rapp, a local girl, was killed by a Gazan Palestinian.

Since the occupied territories were closed off by Mr Rabin, however, the town has found new answers to its fear of Arabs: strong barriers. 'He must give them a country. I don't mind where it is,' said a hotelier.

Hundreds of Palestinians used to work in the kitchens of Bat Yam's restaurants and hotels, or on its building sites. Now there are none and labour is short. But even to employers who valued their Arab workers, the inconvenience is worth the peace of mind. 'We may have to pay higher salaries now, but at least we can leave our children at home and not worry,' says Joel, who works in the tourist office. 'It is worth it for the extra security.'

In the last election, many in Bat Yam backed the Likud, which wants to hold on to all the occupied territories. Now they admit they are not sure whom they would vote for. Ironically, Mr Rabin's Labour Party is not offering as much to the Palestinians as some here would like.

The impact of the closure is felt throughout Israel. It has created a short-term crisis in construction, agriculture and tourism, which relied on cheap Palestinian labour. Nearly 100,000 Palestinians were formerly employed in the occupied territories.

Mr Rabin has been forced to consider importing workers because Israel's numerous unemployed, including many well-qualified Jewish immigrants from the former Soviet Union, have refused the low-paid work. The crisis may have political consequences. By shifting conservative Israeli attitudes towards the idea of handing back territory, the closure may have given Mr Rabin more room for manoeuvre in the peace talks.