Syria Faces An Urgent Decision On Peace As Domestic Developments Gain Pace.

*** Israeli Deputy Minister Sneh Admits That S. Lebanon Pullout Is Being Done Because Israel 'Lacks Stamina' To Keep Taking Casualties; Barak Will Be Judged By The Success Of His Unilateral Withdrawal Strategy

*** Clinton Accuses Bin Ladin Of Involvement In A New Year's Eve Bomb Plot; It Could Be A Signal That Afghanistan Would Face Another US Air Strike

BEIRUT - With the deadline for an Israeli pullout from Lebanon approaching fast, the Syrian leadership is faced with a crucial decision: to make peace with Israel based on the terms currently on the table, or play the Palestinian refugee card in south Lebanon. The decision that President Hafez Al Assad makes will influence the course of peace in the Middle East, and it will make or break the peace process as a whole - because the refugee question is directly related to the Israeli-Palestinian track of negotiations as well. Equally important is the impact it will have on Syrian internal dynamics, with Bashar Al Assad being groomed for succession amid a drive against corruption which has targeted high-ranking government officials.

Another important issue for the Syrian leadership to weigh before the pullout deadline is whether Lebanon would once again become the proxy battlefield, as any attack by the Hizbollah or the Palestinians against northern Israel after July 7 would invite harsh retaliation against Lebanese infrastructure and perhaps governmental targets. Most observers envisage such strikes as likely to be purely punitive in that there will be no attempt by Israel to re-invade Lebanon or create another "security zone". On the contrary, Israeli air force jets will destroy high value targets in Lebanon in order to force the Beirut government, and indirectly the Syrian government, to crack down against guerrilla units in the south.

Such tactics, especially in the aftermath of a withdrawal, will not be condemned strongly by much of the international community. This is because, by pulling out of Lebanon, Israel would have recaptured the "high moral ground". By contrast, the spotlight would turn on Lebanon and Syria, with the latter being seen by much of the West as being the real power driving Lebanese policy. If Israel is exposed to attacks on its northern border, that would also strengthen the Israeli claim that a total pullout from the Golan Heights would make it far more vulnerable. Tactically, therefore, pulling out of south Lebanon is potentially a master-stroke for Israel and will put Assad in a tight corner.

Damascus has been well aware of this possibility ever since Barak began emphasising during his election campaign last year that one of his first moves would be to withdraw from Lebanon. After Barak announced a date for the pullout in recent months, there have been counter-moves from the Syrian and Lebanese sides; Beirut raised the question of the disarmament and resettlement of Palestinian refugees in south Lebanon, with the implicit hint being that Lebanon is in no position to stop them from attacking northern Israel if an Israeli withdrawal is done before a comprehensive deal is signed (see No. 16).

However, an Israeli pullout will put the ball in the Syrian court. It would be up to President Assad to decide (a) whether accepting the deal currently on the table is the best option, which would mean reining in the Palestinian refugees from raising the temperature in south Lebanon, or (b) whether allowing attacks into northern Israel would improve the Syrian negotiating position. To further bolster the Syrian position, Damascus has been gradually moving closer to Baghdad. In late April, Iraqi diplomat Mohammad Rifaat went to Syria to head an office representing Iraq's interests there. Baghdad and Damascus broke off ties in 1980, but their common border was reopened in 1997 to businessmen and officials.

Without the quick resumption of bargaining between Syria and Israel, there is no chance of the current stalemate being broken before July 7. But there are no negotiations underway, at least in public, with talks suspended in late January. There are indications that the suspension was the result of a leak to the media from the Israeli side about gains made by Israeli negotiators in the talks. Repeated rumours of secret negotiations, and hints that a deal would be announced suddenly, have not been validated; and the intensification of violence on the Israeli-Lebanese border indicates that, rather than secret talks, a game of brinkmanship is underway.

Both leaders, i.e. Israeli Premier Ehud Barak and Syrian President Assad, have global and domestic political compulsions that are in favour of a deal. Barak wants a spring 2000 referendum on a peace with Syria, as he promised during his election campaign. This will allow him to get maximum aid from the Clinton administration in the US before it goes out of office and boost his own political standing domestically. Barak has been weakened considerably in recent months by powerful partners opposed to various policies, including the proposed peace deal with Syria.

The compulsions are far greater on the side of Assad. The Syrian leader is nearly 70 years old and is in poor health. He is making the moves necessary to leave his son in a position to take over the reigns of power, if not immediately after his death then soon thereafter. He does not want to leave behind the legacy of territorial conflict with Israel for his son to deal with.

Assad also knows that if a deal is not reached, and if violence escalates after an Israeli pullout from Lebanese territory, Syria stands the risk of facing global isolation. After the Geneva summit with President Bill Clinton in late March, Washington has taken a harder line with Damascus - because after numerous visits by American secretaries of state and envoys to Syria, the US has nothing to show for it. The situation after the November 2000 US presidential elections could be even more precarious, especially if Bush Jr. wins as the latest opinion polls indicate, because the Republicans are likely to adopt a much tougher posture against Syria.

Internally, the political ground is shifting with Assad's efforts to boost Bashar gaining speed. Bashar is being given a much higher profile in the media, and he has a relatively free hand to pursue his pet projects - including advancement in the information technology sector, economic reforms and an anti-corruption drive. The corruption drive is now beginning to target senior figures.

On May 10, the Syrian Arab News Agency (Sana) said former premier Mahmoud Al Zohbi had been been expelled from the ruling Baath party and is to be put on trial for corruption. Quoting the minutes of a meeting chaired by Assad, it said the Baath Party leadership regarded the "irregularities and abuses committed by Mr Zohbi... as contrary to the principles and values of the party. This behaviour seriously harmed the image of the party and state as well as the national economy". 'Tishrin' newspaper reported in May that government corruption cost the treasury at least $50,000 a day. It said state financial controllers uncovered 39 cases of fraud in the first quarter of 2000, representing a loss of $4.5m over the same period.

In June, the Baath Party is to have its first national congress in fifteen years. It is expected that the meeting would see major changes within the leadership of the party. Bashar will be invited to join the party's top hierarchy.