Israel

By LISA BEYER/TEL AVIV

As Israeli and Palestinian negotiators resume talks aimed at completing a final, comprehensive peace agreement, hanging over them is a pledge made by Palestinian leader YASSER ARAFAT to declare a Palestinian state by year's end, with or without Israel's acquiescence. During his interview with TIME (see WORLD), Prime Minister EHUD BARAK revealed a position not unlike that of his hard-line predecessor BENJAMIN NETANYAHU. Barak says if Arafat unilaterally declares a fully sovereign state in all the West Bank and Gaza Strip, Israel would respond by unilaterally annexing Palestinian territories Israel wants to keep for itself, a move long avoided because of the international controversy it would stir. Arafat, says Barak, "will ask recognition from nations of the world, and most of the world will immediately recognize him. There are certain areas that he will claim and we will claim. Immediately a question will emerge: Who really is the sovereign there?" It's a scenario Barak hopes to avoid. "Unilateral steps would bring a quick countdown toward confrontation."

--By Lisa Beyer/Tel Aviv