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With the decision by Israeli premier Benjamin Netanyahu to move ahead with the peace process, there is a dawning reality that a Palestinian neighbor is taking shape alongside the state of Israel. Israelis recognize that there will be an autonomous Palestinian self-ruled entity or state of Palestine on their eastern border.

On reflection, the character and complexion of that emerging Palestinian entity is of greater import. A final-status agreement with a democratic Palestinian government respecting individual liberties, civil rights and due process of law might look quite different from an agreement with an autocratic and repressive Palestinian regime.

Unfortunately, the experience with the Palestinian Authority under its chairman, Yasser Arafat, has not inspired much confidence or hope.

B'tselem, the Israeli human-rights agency monitoring human-rights violations in the territories, and the more recently established Palestinian Human Rights Monitoring Group, last month issued a joint report entitled Human Rights Since the Oslo Accord: A Status Report. The picture they depict is both dismal and discouraging.

In 1996, human rights in those areas under Palestinian Authority control have been violated in a systematic manner, through arbitrary mass arrests by Palestinian security agencies along with torture of detainees. At least 10 prisoners have died in detention. Furthermore, detainees have been tried by national security courts without elementary standards of justice.

The joint report also indicates that the Palestinian Authority, in a systematic manner, has interfered with and repressed the elementary right of freedom of expression. Journalists have been arrested and photographers have had their equipment confiscated and destroyed; newspapers have been closed for criticizing Arafat and his Palestinian Authority.

Arafat did not deserve the warm welcome accorded him by President Clinton, given the growing body of evidence that the Palestinian entity is led by a despotic leader who has little understanding or appreciation of democratic processes.

But there is hope. There are seedlings that have been planted and, if cultivated, may yet yield a crop of new young political leaders familiar with and committed to democracy.

It has been a year since the elections for the Palestinian Legislative Council. A recent day in Ramallah with the Palestinian Council sparked hope that Palestinian democracy will prevail. More than 50 of the 88 council members attended.

The session was all too familiar. Debating the civil service law, speaker after speaker droned on about pay scales and benefits for civil servants. In deliberating over provisions for salaries, legislators cited the system used in Israel. Such reference to Israel is usual and common in the Palestinian Legislative Council. Indeed, many of the legislators uphold Israel as an examplar.

Said Speaker of the Council Abu Alla, one of the chief negotiators of the Oslo Accords, "Israel for us is a model. We should not be less democratic than our neighbors."

Abu Alla points with pride to some 140 laws and a draft constitution that the council has passed. It sounds impressive until one learns that none of the legislation nor the draft constitution has been implemented. The draft constitution has been sitting on Arafat's desk since last summer, and without his signature cannot pass into law.

The constitution, if adopted and followed, would produce a neighbor with which Israel could live in peace. It includes a clause stating, "All Palestinians are equal before the law, without any discrimination between them in respect to rights and obligations because of race, language, religion, sex or disability."

The document also affirms the right of free assembly; the right to freedom of expression, and even the right to a balanced and clean environment.

The Palestinian Council, in a document outlining its structure, powers and responsibilities, concludes with a paragraph on Israel.

"Israel and the Palestinian Council shall seek to foster mutual understanding and tolerance. And shall accordingly abstain from incitement including hostile propaganda against each other."

What more could Israel want of its soon-to-be neighbor? We should be urging adoption of this Palestinian Constitution rather than seeking revision of the Palestinian National Council Covenant clause that calls for Israel's destruction.

Is there hope that a future Palestinian leader, after Arafat, can preside over a democratic state?

Marwan Hussein, 37, who represents Ramallah and was twice deported by Israel for illegal political activity, is loyal to Arafat but still believes strongly in his right to oppose Arafat's policies.

"The majority of Palestinians believe in democracy. For them, there are no holy men whose orders are to be followed blindly," he said.

At this point, Arafat and his outside cronies are calling the shots. Confrontation with Israel and assertion of national rights, unfortunately, seem to excuse repression and corruption.

One can only hope that the younger generation of insider Palestinian leaders will come to the fore and live up to their proclaimed democratic commitments and ideals.

The writer is Israel director of the American Jewish Congress.