HOW WILL BARAK LEAD? : A new day for Israel.

The main foreign-relations challenge facing the new government of Israel is settlement with Syria. Prime Minister-elect Ehud Barak recognizes this. He has said that real security for Israel has to come through agreements with its neighbors.

A Syrian agreement will influence the Palestinian situation. Israel and the Palestinians need to turn a new page, which means a final accord that will not be challenged by Islamic integralists or by a younger generation of Palestinian nationalists alienated by the corruption and compromises of Yasser Arafat's Palestinian Authority.

The May election dealt a stinging defeat to Israel's colonists' lobby, which, under Benjamin Netanyahu's febrile coalition of nationalist and religious parties, possessed inordinate power, enjoying government subsidy and encouragement-not only to defend every meter of occupied and colonized territory, but to expand Israel by "creating facts on the ground," which is to say, by expanding further into Palestinian lands. The newly elected prime minister is a nationalist, too, but he owes the colonists nothing.

Agreement on Golan is crucial because Syria is Israel's most powerful neighbor. Syria also controls Lebanon, where it has permitted the Moslem movement Hezbollah to wage war, with mounting effect, against Israeli troops and their Lebanese mercenary auxiliaries, occupying what has become the embarrassingly misnamed Israeli security zone inside Lebanon. From its strongholds, Hezbollah also bombards northern Israel with rockets-as it did again in the early hours after the election.

Barak has promised to remove Israeli troops and close down the Lebanon security zone within a year. Members of the auxiliary force are already looking for safer careers.

To have a secure evacuation of Lebanon, Barak needs Syrian and Lebanese guarantees on Israel's northern border. For that, he must settle the Golan issue, where Israeli colonists and troops occupy land seized from Syria in the 1967 war. There will be no agreement there without Israeli concessions. Barak is a realist.

Compared to the Syrian problem, settlement with the Palestinians should be a simple matter. The terms have been agreed to for years. The reason they have not been applied is that Netanyahu kept trying to revise them in Israel's favor. His electorate would have preferred no agreement with the Palestinians.

If Barak is indeed the realist he appears to be, there will be a Palestinian settlement and state within months. He does not need the fruitless distraction of further trouble with the Palestinians-already stripped of virtually all serious power.

The fundamental domestic policy choice he must make concerns the struggle between lay and religious forces over the nature and future of Israeli society. This political confrontation stems from a more subtle and extensive conflict that is cultural, generational, and-with respect to the Sephardic minority in Israel-possesses even a "racial" aspect.

The practical choice that Barak has to make is whether to include in his new government the ultrareligious Sephardic party, Shas, which went from ten seats in the last parliament to seventeen this time.

Alternatively, Barak could construct a coalition of the center-left, including most of the secular forces traditionally aligned with the Labor party. This would be the conventional thing to do, and it would be a positive response to the electoral majority's choices with respect to "values," the larger social orientation of Israeli society, and the role of religious authority in the country.

Shas is more a movement than a party, and perhaps more of a state- within-the-state than a movement. It could be called a countersociety inside Israel, an alternative Israel. Its members are mostly poor Sephardic Jews from North Africa who have always been looked down upon by the Ashkenazi elite who created the country and ruled it for the better part of its history. Barak, a Sabra-born in Israel-is part of that elite.

Shas has become a system of schools, school transport, social assistance institutions, clubs, women's groups, vacation colonies, discount stores, and retirement homes that have mobilized, aided, and integrated tens of thousands of poor immigrants otherwise mostly ignored, if not despised, over the years by the Israeli establishment.

Shas opposed Barak's election. Its leader, Arieh Deri, has been convicted for financial corruption and sentenced to four years in prison, pending an appeal. The party wants Israeli life ruled by ultra- Orthodox rabbis and is hostile toward liberal and reform Judaism.

However, Shas is moderate on the question of peace settlements. Bringing it into a government that made peace could not only politically implicate the Sephardic community-contributing toward its mainstream integration-but confirm Barak as a reconciler of Israelis and healer of the country's social wounds after years of divisive Likud government.

The new prime minister's political choice will be a significant indicator of what this divided society may become in the next few years. n (c) 1999, Los Angeles Times Syndicate