Israel to Allow Exiled Palestinians to Return : Mideast: 5,000 a year will be reunited with families in occupied territories. Some prisoners will also be released.

TUNIS, Tunisia — Israel took a first step Tuesday to provide hope for millions of exiled Palestinians, saying it will allow 5,000 each year to be reunited with their families in the occupied West Bank and Gaza Strip.

The proposed reunions--to be allowed in addition to any Palestinians permitted to return as police or administrators under a new self-rule plan for the occupied territories--were the first concrete effort to deal with the plight of refugees since an interim peace agreement was signed Sept. 13 between Israel and the Palestine Liberation Organization.

The Israeli government also said it would approve the return of 10 Palestinians deported with their families from the territories in the 1970s. And it said that during detailed peace negotiations scheduled to open today in Egypt, it will agree to the release of “a significant number of prisoners” in Israeli jails.

In a landmark move, Israeli officials made their announcement here in the heartland of Israel’s erstwhile enemy, the PLO; an Israeli delegation for the first time met a PLO delegation in an Arab capital, to open the first of three days of talks on the question of Palestinian refugees.

“Landing this morning with the first Israeli plane in Tunis was very important, on one hand, and strange, on the other hand, since I thought to myself how difficult it is now to get excited about such precedents. It is a short month full of such precedents,” Yossi Beilin, Israel’s deputy foreign minister, told reporters Monday.

Beilin, who met with PLO Chairman Yasser Arafat and PLO security chief Hakim Balawi on Tuesday, called the multilateral conference on refugees in the Tunisian capital “a milestone in the peace process.”

“It is a kind of common knowledge that the most difficult thing in the talks between us and the Arabs will be the one of the refugees. I personally believe this is one of many myths,” Beilin said. “Not that it is an easy problem. But . . . if we were able to surmount the many challenges and problems of the last few months because we wanted to find an agreement, I think the (refugee) problem is not so insurmountable.”

The PLO delegation, negotiating for the first time independently and not as a component of a joint Palestinian-Jordanian delegation, emphasized that the success of the peace process depends on answering the needs of not only the 1.5 million Palestinians in the occupied territories, but also the 3 million to 4 million more who live outside them--mainly in Jordan, Syria and Lebanon. These Palestinians were displaced by either the creation of Israel in 1948 or the occupation of the West Bank and Gaza in 1967.

“Let us not for a second believe that peace could be reached with a mere 10% of the Palestinian people, who have lived under Israeli occupation since June, 1967,” PLO delegation chief Elias Sanbar told the conference. “In order to become a credible vision and a tangible reality in our area, peace will have to transform the lives of Palestinian exiles as well as those of the Palestinian residents of the West Bank, Gaza Strip and East Jerusalem.”

Israel’s offer Tuesday for 5,000 returnees a year affects only those Palestinian exiles who are to be reunited with family members in the West Bank and Gaza; priority will be given to reuniting spouses and to special humanitarian cases, an Israeli spokesman said.

Israel now processes only 1,000 such cases each year.

Under the Declaration of Principles signed by the Israelis and Palestinians in Washington last month, the most difficult refugee issue is left for last--the estimated 1.5 million Palestinians who have been refugees since they were driven from their homes in Palestine by the 1948 war. The agreement states that the issue of 1948 refugees will not be decided until talks begin within three years on the final status of Palestine, after an interim period of Palestinian self-rule.

The issue of the estimated 800,000 displaced by the 1967 Arab-Israeli war is to be determined in direct negotiations beginning today; Tuesday’s session in Tunis underlined the divisions already apparent on that question.

While Israel has made it clear that it is unprepared to accept the return of hundreds of thousands of Palestinians to the West Bank and Gaza in the next three years, Sanbar emphasized that the Washington agreement “recognizes the right of displaced persons to return to the occupied territories during the interim period.”