Israeli Cabinet OKs Peace Plan : Mideast: Sixteen ministers vote to approve framework for eventual Palestinian homeland and two abstain. Outside, 4,000 demonstrators denounce accord.

The Israeli government, urged by Prime Minister Yitzhak Rabin to lead the country into a new era of peace with its Arab neighbors, on Monday approved a series of historic agreements reached with the Palestine Liberation Organization to begin the establishment of a Palestinian homeland.

While nearly 4,000 angry right-wing demonstrators outside denounced the accord as a danger to Israel’s existence, the Cabinet voted to sign a broad “declaration of principles” that provides for Israeli withdrawal from the Gaza Strip and Palestinian self-government on the West Bank.

Sixteen members of the Cabinet voted for the proposal, and two--Economics Minister Shimon Shetreet and Interior Minister Arye Deri--abstained after a discussion that continued for more than five hours, ending after midnight.

Saying that the time had come to “take a risk for peace,” Rabin portrayed the agreement with the Palestinians as the key to a broad peace in the Middle East, one that will ensure Israel’s security into the next century.

“We stand on the verge of a great opportunity,” Rabin told members of Parliament from his governing coalition Monday. “There is movement along the whole Arab front in readiness for peace. There are big obstacles, there are difficulties, but I am convinced the horizons for peace are open. . . .

“A solution to the problem with the Palestinians is a solution for the focus of the Arab-Israeli conflict. What has been achieved . . . is a big step forward in moving Israel toward peace with the neighboring countries, first and foremost with the Palestinians.”

Foreign Minister Shimon Peres, who negotiated the accord in a series of secret meetings with senior PLO officials, told Parliament in an impassioned plea for support: “The 100-year-old conflict between us and the Palestinians is now starting to come to an end.”

The result of this accord, Peres predicted, his voice cracking with emotion, will be “an opening to 100 years of interchange and good-neighborliness--each people beneath its own flag, each people with its own prayer book, all of the peoples of the region in economic cooperation.”

The agreements, which include a statement on future negotiations as well as a pledge of economic cooperation, are expected to be signed by the Israeli and Palestinian delegations to the Arab-Israeli peace talks, which resume today in Washington.

The agreement with the Palestinians, Rabin said, should open the way to early progress with Syria, Lebanon and Jordan in the 22-month-old peace talks.

“There will be criticism, and people will talk about problems here and problems there,” Rabin acknowledged. “But big acts cannot be done without programs and without reasonable risks. . . . We committed ourselves not just to talk about peace, but to make peace.”

Despite the political, military and administrative complexity of the move, Israeli officials said the two sides will commit themselves to working out a program of implementation by the end of the year. Under this timetable, Israeli forces will begin pulling out of Gaza in six months and later from the region around the West Bank town of Jericho.

Clear differences of interpretation have already emerged between Israelis and Palestinians on the scope of self-government and the status of Gaza and Jericho. Delegates to the peace talks for both sides said intensive negotiations will be needed to meet those deadlines.

Although negotiated with the PLO, the agreements will be signed with the Palestinian delegation to keep them within the framework of the Washington talks, Israeli officials noted.

As outlined by Peres, the agreements envision the election of a Palestinian council, which will have its headquarters in Bethlehem, south of Jerusalem, and will assume administrative responsibility for the rest of the West Bank.

Providing further details of the agreement, Peres told the Knesset, Israel’s Parliament, during a stormy debate that the Palestinian government will have a strong police force to replace Israeli troops as they are withdrawn. PLO members may be elected to the Palestinian council, he said, and Israel is looking for ways to expedite the transfer of authority.

Although the agreements involve only an initial five-year period of autonomy, they look toward the permanent status--most probably independence--of the West Bank and Gaza Strip, which Israel captured in the 1967 Arab-Israeli War. Negotiations on that will begin in two years.

“We want to live with them in peace!” Peres said to the angry shouts of opposition members of the Knesset. “They are human beings just like us! We don’t want to control them, to degrade them, to humiliate them. They are not four-legged creatures, they are not in bottles (like insects), they are not animals, they are people like us! And we will live with them in peace!”

Shulamit Aloni, leader of the leftist Meretz Party, hailed the agreement as one that frees Israel “from a situation in which we are ruling another people.”

“We are bound, though as prison guards, to those same prisoners who have no rights,” she said.

Both Rabin and Peres stressed the measures included in the agreement to ensure Israeli security.

“Security and everything that impacts on Israelis, not just the settlers (on the West Bank and Gaza Strip), is in Israel’s hands,” Rabin said. “Security on the confrontation lines, on Israel’s borders or any dividing line is all in our hands.”

But opponents of the agreement appeared further enraged by these assurances.

“If you think you are not creating a mini-Libya in Jericho and a mini-Tehran in Gaza, then you are not living in the Middle East,” said Benjamin Netanyahu, chairman of the opposition Likud Party. “Behind the back of the people, this government is establishing the bridgeheads for a Palestinian state.”

Yeshoshua Matza, another Likud member of the Knesset, warned during the raucous debate, “We may have to call the people to rebel!”

Although rebuked by other Likud members, Matza continued: “I maintain there is no democracy (in Israel). This is a government that is held up by PLO supporters. . . . There are people sitting in this house who are PLO, who come from the PLO’s race, from the non-Jewish race. . . .

“The basic question that is being asked here is whether . . . we will try to get the people to rebel.”

During the special Cabinet meeting, Jewish settlers from the West Bank and right-wing activists hurled eggs and then stones, scuffling with riot police and nearby leftist demonstrators. Police said they arrested 21 protesters.

The Search for Peace

AGREEMENT’S KEY POINTS

* Israeli withdrawal simultaneously from the Gaza Strip and Jericho.

* A pledge of economic cooperation.

* Election of a Palestinian council to administer both the West Bank and Gaza Strip.

THE DEBATE

* “If you think you are not creating a mini-Libya in Jericho and a mini-Tehran in Gaza, then you are not living in the Middle East.”

-- Benjamin Netanyahu, leader of the right-wing Likud opposition.

* “We want to live with them in peace! They are human beings just like us!”

-- Shimon Peres, Israeli foreign minister

WHAT’S AHEAD

* Negotiators are to sit down today for the start of a new round of peace talks expected to finalize the self-rule plan.

* Months of tough bargaining may be required to complete the plan, U.S. officials warn.

* Yasser Arafat visits Arab capitals to urge leaders to back the accord.