News Analysis: Netanyahus crisis could force him to seek national unity government

JERUSALEM — After four weeks of crisis in Israeli-Palestinian relations, Prime Minister Benjamin Netanyahu appears ready to offer some confidence-building measures to revive the peace process.

Netanyahu's new conciliatory stance apparently extends to Har Homa, the new Jewish housing project in southeastern Jerusalem that has prompted almost daily Palestinian demonstrations in the West Bank for the past month.

His gestures include the three further Israeli redeployments called for in the Hebron agreement signed in January.

The scope of the first redeployment — much like the Har Homa issue — angered the Palestinian Authority, which balked at accepting what it considered a paltry turnover of West Bank land. That redeployment has yet to be implemented.

Netanyahu's new positions were reported this week as he prepared for an important round of talks with U.S. envoy Dennis Ross, who headed to the region to coax Israel and the Palestinians back to the bargaining table.

Ross' visit was the subject of keen interest in Washington: U.S. Secretary of State Madeleine Albright said this week that the outcome of Ross' mission would shape the course of American policy in the ongoing crisis.

Netanyahu's crisis-control efforts may force him to seek a national unity government, but this route is fraught with obstacles.

Although the Labor Party's veteran leader, Shimon Peres, favors the idea, much of the Labor leadership is opposed to it. They are awaiting the potential collapse of the Netanyahu government in the wake of reported indictments in the Bar-On Affair against the premier, an aide and two Knesset members.

Netanyahu's new conciliatory peace posture covers two broad fronts:

*Har Homa: In conversations with Italian officials over the weekend, Netanyahu said that while land clearing has begun, the actual construction of Jewish housing may not start until the year 2000 — by which time the final-status talks with the Palestinians would be completed.

Netanyahu also has proposed building Palestinian housing in Jerusalem, possibly on a hill across from Har Homa. He is said to be anxious to dispel an impression in Washington and in European capitals that this idea is merely a public relations stunt.

*Further redeployments: Last month, the Palestinian Authority rejected the Netanyahu government's decision to withdraw from 9 percent of the rural West Bank. Netanyahu and his aides said the Palestinians harbor unrealistic expectations.

Now, Netanyahu is proposing a more generous transfer during the second redeployment, scheduled for September. The premier discussed this idea during meetings with key coalition figures, who then briefed the Knesset's so-called "Greater Israel Lobby," a group of 17 hawkish parliamentarians, most of them members of the coalition.

Netanyahu reportedly said he could not proceed with the current coalition into the second West Bank redeployment, given the strong "rejectionist front" element, as he is said to have dubbed the hardliners.

His insinuation, as members of the Greater Israel Lobby themselves admit, was that unless the coalition now rallies around a generous second redeployment, Netanyahu will have no option but to create a unity government to further the peace process.

Netanyahu indicated in a series of interviews last weekend that a decision on trying to form a unity government is time-sensitive.

Labor is due to hold its leadership election June 3, after which Peres will step down from the party leadership.

This factor is clearly important to the premier because the two main contenders for the Labor leadership, Ehud Barak and Yossi Beilin, oppose the unity option.

Netanyahu is aware that the return of Peres, an architect of the Israeli-Palestinian accords, to the Cabinet could give the languishing peace process and his own stature a much-needed boost.

But he is equally aware of the problems a unity government could create.

First, the National Religious Party would likely bolt a unity government. Some political observers believe that a unity government would rupture the Likud itself, because some Likud ministers would presumably have to move aside to make way for Labor members.

In the meantime, as Netanyahu ponders his domestic options, the threat of a large-scale explosion of Palestinian violence remains.

Israeli officials say the Palestinian Authority is still balking at a return to regular security cooperation.

But the Palestinians say they will not act as an agent for Israel, suppressing their own hardliners while the peace process is tattered because of what they see as Israeli intransigence.

Still, cooperation between the two sides on the ground has been fairly good, according to Israeli sources.

These sources say the Palestinian Authority is straining to keep the ongoing street demonstrations under control and to keep daily incidents of stone-throwing from sparking wholesale violence throughout the territories.

So far, six Palestinians have been killed and several hundred wounded in clashes with Israeli soldiers during the four weeks of tensions, which have been at their most violent in the West Bank town of Hebron.

And Israel sealed off the West Bank Wednesday amid warnings that Palestinian militants were planning terrorist attacks in Israel. The army also ordered soldiers to hitchhike to bases with a buddy and to carry weapons, while barring women soldiers from hitching rides at night.

Observers on both sides point to the extreme fragility and volatility of the situation — even when compared to the intifada, the 1987-1993 Palestinian uprising.

At that time, although the violence was more intense and widespread, the risk of full-fledged armed conflict was much lower.

The Palestinians had no armed force of their own, their political leadership was in exile and Israeli security forces could deploy at will throughout the territories.

All that has changed.

The Palestinian Authority now commands thousands of people, and there can be no assurance that some of them will not link up with rejectionist elements in the event of a total collapse of the peace process.

Moreover, Palestinian Authority leader Yasser Arafat and his lieutenants are in Gaza and the major West Bank cities, which have been transferred to Palestinian control.

Indeed, in response to a remark by Defense Minister Yitzhak Mordechai last week that the IDF could easily reoccupy all the West Bank cities, a senior Palestinian official said the Israelis could easily get into the cities, but would have greater difficulty getting out.

This changed reality on the ground means, according to many observers, that Netanyahu cannot risk an open-ended crisis. An act of terrorism, or even a major altercation on the West Bank between Palestinians and Israeli soldiers, could quickly ignite a tragic conflict.