With the withdrawal of Israeli forces from nearly two-thirds of the Sinai Peninsula and the beginning of normal relations between Egypt and Israel just five days away, the two governments today moved farther away on the issue of Palestinian self-government than they have been since the signing of their peace treaty last March.
That gloomy assessment emerged as Israel's Cabinet today icily "took note" as Egypt's rejection of Israel's detailed self-rule on the West Bank and Gaza Strip. The ministers, led by Prime Minister Menachem Begin, condemned an Egyptian counterproposal for a Palestinian legislative assembly as a "complete distortion" of the Camp David accords.
Washington Post correspondent Edward Cody reported from Cairo that the officially guided Egyptian press has accused Begin also of trying to "distort" the Camp David agreements. The Egyptian minister of state for foreign affairs, Boutros Ghali, has issued several tough warnings that unless things change, bilateral normalization will suffer.
With the negotiations on Palestinian autonomy deadlocked, the leaders of Egypt and Israel appear increasingly to be looking toward a new summit meeting with President Carter, although the American president repeatedly has expressed reluctance to host a second tripartite summit, Cody reported.
President Anwar Sadat told a Zairian parliamentary delegation visiting Cairo yesterday that he favors the idea of another Camp David-style summit, responding to a similar suggestion last week from Begin. Thus both Sadat and Begin were on the record as in effect asking for the president's personal mediation to bring the talks out of their stalemate.
[A summit meeting at Aswan, Egypt, between Sadat and Begin ended 10 days ago with the two leaders unable to disguise their deep disagreement on the nature of Palestinian autonomy as provided for in the March 26 Egyptian-Israeli treaty.]
In an attempt to dampen the crisis atmosphere that has surrounded the autonomy negotiations, the Israeli Cabinet, after discussing the issue for two hours, said in a terse communique that it had made no decisions about the Egyptian rejection last week of Israel's first comprehensive proposal for limited self-rude for the 1.1 million Palestinians of the West Bank and Gaza Strip.
The Israeli proposal would transfer to a Palestinian "self-governing" council a broad array of public service functions but would perpetuate Israeli control of such vital areas as use of public domain land, water resources, internal security, Jewish civilian settlement, fuel and power, currency and banking, communications and radio and television.
Cabinet Secretary Aryeh Naor attempted to put the best face possible on the situation, saying the ministers "took note" of the rejected Israeli offer and stressing that autonomy negotiations would resume at the end of the month in Tel Aviv. He sidestepped reporters' questions about the Egyptian counterproposal -- which envisions a Palestinian legislative assembly -- but left the impression that the Cabinet ministers did not deal with it.
However, Cabinet sources tonight said the ministers considered the Egyptian plan at length and rejected it outright.
Begin, sources said, characterized the Egyptian offer as a "distortion" of the letter and spirit of Camp David and pledged that Israel will stand firm against any proposal that will "lead to a Palestinian state."
Interior Minister Yosef Burg, head of Israel's autonomy negotiating team, was quoted as warning the Cabinet to expect a "hardening" of Egypt's position in light of recurrent statements by Carter administration officials that a speedup in the resolution of the Palestinian issue is essential to achieve stability in the Middle East and western Central Asia. Burg reiterated the Israeli view that the Palestinian issue had nothing to do with events in Iran and Afghanistan.
The Egyptian proposal, outlined only in broad terms by the head of the Egyptian autonomy working committee, Izzat Abdul-Latif, in reply to the Israli proposal, demands that the existing authority of the Israeli military government in the West Bank and Gaza Strip be transferred entirely to a local Palestinian parliament and that self-rule apply to East Jerusalem as well.
East Jerusalem was annexed by Israel following the 1967 Six-Day War, and Begin has vowed that the capital city will never again be divided. The issue is not negotiable, Begin has said.
Under the Egyptian plan, the legislative assembly, or parliament, would consist of 80 to 100 representatives, headed by an executive body of 10 to 15 members. Israel is proposing a self-governing council of 11 members.
Israeli's opposition to a legislative body is based on the fear that it could transform itself into a constitutional assembly and declare Palestinian independence, which Begin has warned would force Israel to reoccupy the West Bank and Gaza Strip.
Post correspondent Cody also reported from Cairo:
Discussion in Egypt and Israel of a second Camp David-style summit comes as the two countries approach an important psychological milestone in the execution of their peace treaty.
On Jan. 25, Israel completes its pullback from two-thirds of the Sinai, restoring to Egyptian sovereignty everything west of a line from El Arish in the north to Ras Muhammad on the southern tip of the peninsula. At the same time, the treaty provides for opening of land, sea and air connections and the beginning of "normal" relations between Egypt and Israel for the first time since the Jewish state was born in 1948.
But the stalemate on the Palestinian autonomy talks has cast a shadow over this major bilateral step.
Secretary of State Cyrus Vance has suggested in Washington that regional security needs created by the crises in Afghanistan and Iran make progress in the talks all the more urgent. His comments, which paralleled observations by Egyptian officials, were poorly received in Israel and genertated new fears of U.S. pressure for Israeli concessions.
But the new U.S. chief negotiator, Sol Linowitz, also stressed the need for progress in the autonomy talks to smooth the way for regional security cooperation with such Arab states as Saudi Arabia. Linowitz is scheduled to visit Saudi Arabia next weekend to introduce himself to Saudi leaders as Carter's Middle East representative and assure them of U.S. intentions to keep the Palestinian part of the peace treaty alive.
The semiofficial Egyptian press repeatedly has reported in recent days that Egypt intends to dole out concrete normalization steps over the next six months only according to Israeli concessions in the autonomy talks.