JERUSALEM -- When Yasser Arafat returned to the Gaza Strip one year ago today, his arrival was supposed to be a big step toward resolving the conflict between Israel and the Palestinians.
That step became a stumble. Israeli and Palestinian negotiators still have not agreed on the next phase of their peace accord -- withdrawal of Israeli troops from the West Bank and Palestinian elections.
A deadline proclaimed by both sides will pass today without the promised agreement on withdrawal. Israeli Foreign Minister Shimon Peres is scheduled to meet Mr. Arafat, chairman of the Palestinian authority, tonight.
But both sides have acknowledged that the best they hope for is an announcement on a few points of "understanding" and a new deadline.
"By the middle of the month, we will be able to close the issue," said Israeli Cabinet member Yossi Sarid.
The missed deadline -- the latest of a succession of broken dates since the two sides signed a peace accord in September 1993 -- carries risks.
Palestinian groups opposed to Mr. Arafat vowed to retaliate if they saw no progress by today, July 1. Israelis worry that that may mean an end to the five-month lull in serious bomb attacks against Israelis.
And Palestinians have returned to the streets to protest. A hunger strike by Palestinians held in Israeli prisons has reignited street demonstrations. Yesterday, the 13th day of the hunger strike, Israeli troops were involved in minor skirmishes with protesters in several areas, and the demonstrations were expected to accelerate this weekend.
Israel holds about 5,600 Palestinians in prison. Their strike, demanding at least a schedule for their release, has become a further sticking point in the negotiations.
"They want us to meet their conditions," Mr. Arafat said of the Israeli negotiators at a rally Thursday in Gaza. "They are using the prisoners . . . as hostages to blackmail us to make concessions."
Israeli Police Minister Moshe Shahal said yesterday Israel will not free inmates who refuse to sign statements supporting the peace process.
"One of the problems are the prisoners who do not support the peace process, and declare -- even now -- that they will continue to use violence and terror," he said.
Without a settlement of the prisoner issue, which is an emotional cause for the Palestinian public, negotiators may not be able to strike a deal for the Israeli withdrawal from West Bank towns.
"I think you could not sign an agreement without attending to the prisoner issue," Palestinian negotiator Nabil Shaath said yesterday, after a fruitless meeting in Jerusalem on the issue with Israeli officials.
The laborious negotiations have melted expectations as the months have passed. In their accord, signed on the White House lawn 21 months ago, Israel agreed to withdraw from Arab-populated areas in the West Bank by July 1994.
But Israel has retreated from that promise, saying security concerns make it necessary to retain control in many areas now patrolled by the Israeli army. The Palestinians have refused to schedule an election until the army withdraws.
Israeli negotiators say they may be willing today to announce an agreement to withdraw from only a few West Bank towns, with the details of the plan to be agreed upon later. Mr. Arafat, desperate to show Palestinians some progress, may agree to that plan.
But he has complained angrily, saying the Israelis make promises and then back off from them during subsequent negotiations.
"They want to give us [authority over] agriculture, but not the water," Mr. Arafat said.
Mr. Arafat arrived in Gaza July 1, 1994, after 27 years in which he fought for a Palestinian state. But his dreams, and those of his supporters, have soured since the agreement with Israel.
Mr. Arafat has autonomous control only of the Gaza Strip and small West Bank town of Jericho. The accord with Israel set out a schedule for Palestinian elections and autonomy for much of the remainder of the West Bank, and resolution of issues such as Jerusalem, none of which has occurred.
Both sides are wary of Israeli elections in November. Nearly every poll in Israel suggests a change in government toward the right-wing parties.
A rabbi yesterday gave permission to Israeli settlers to hold protests today, the Sabbath, against the prospect of Palestinians assuming control of the West Bank.
A spokesman for former Chief Rabbi Avraham Shapira said the settlers could carry weapons, two-way radios and block streets on the Sabbath, because "it is important."