HEBRON — The faltering Middle East peace process got a badly-needed boost this month when Israel and the Palestine Liberation Organization (PLO) reached an agreement on Israeli military redeployment in the West Bank city of Hebron.

The Hebron deal was signed Jan.14.The next day, the Israeli flag was lowered on military outposts in Hebron, and Palestinian police moved in to the city.Hebron, where 400 Jewish settlers live in the middle of 120,000 Palestinians, has long been a flashpoint for violence — and, for the last eight months, the major stumbling block in Palestinian-Israeli talks.

The Hebron protocol, which was brokered in large part by U.S. Special Envoy Dennis Ross, largely resembles the original 1993 agreement on redeployment, which should have taken place last March. It gives the Palestinian Authority (PA) control over 80 percent of the city, while 1,200 Israeli soldiers will continue to guard the settlers.

More significant than the redeployment is agreement by Israeli Prime Minister Benjamin Netanyahu to move ahead with the other outstanding issues in the Oslo peace accord, such as the release of Palestinian prisoners and the opening of the Gaza Airport and sea port, all of which had been scheduled to have taken place almost a year ago.

In return, the Palestinians are called upon to extradite terrorism suspects, clamp down on terrorist activities in the territories they control, and permanently remove a call for Israel's destruction from the Palestinian National Charter.

Palestinian President Yasser Arafat said the peace process “can now move forward, for both our benefits.” Netanyahu was similarly upbeat about the deal, citing as the big Israeli gain the fact that he “made no firm commitments” on the future Israeli redeployments from the 94 percent of the West Bank it still controls.

But not all Israelis share Netanyahu's optimism.He has infuriated the Israeli right wing — his support base — with this first solid indication that he will continue the Oslo process, ultimately returning territory to the PA.The prime minister only narrowly managed to quash a cabinet revolt by ministers who accused him of “selling out” the Jewish homeland.

“This is the center of the Jewish homeland,” settler spokesman Noam Arnon said of Hebron, where Abraham and the other Jewish (and Muslim) Patriarchs are believed to be buried. “Netanyahu has sold us out, imperiled us.We've been betrayed,” said Arnon.

According to Jewish tradition, Hebron is the holiest city after Jerusalem, since it is the burial place of the matriarchs Leah, Rebecca and Sarah and of patriarchs Isaac, Jacob and Abraham, who is considered the father of Jews and Muslims.

“For us it is also a holy city,” noted Jesuit Father Juan Manuel Moreno, a professor of Holy Scripture at the Biblical Institute in Jerusalem. “Abraham is also our father, but it has not been possible for us to pray there. We would love to just have a little corner for us to pray. It is a spiritual thing.” Because of the holiness of the site, all religions should be permitted to pray at the tomb, he said.

Dreading the imminent arrival of the Palestinian police, settler Shani Horowitz, who lives at the edge of the heavily guarded settler compound in the center of the city, said she was terrified for her seven children, saying that there will be “terrorists in uniforms right outside our doors.”

While the settlers have been making dire predictions about the risk to their security when Palestinians take over policing duties, the Hebron redeployment — or, more accurately, partition — isn't going to make much difference to the city's Palestinian residents. Their civil affairs have been handled by the PAfor more than a year.Now, in 80 percent of the city which the PAwill control, there is a sense of relaxation. “There's something to be said for knowing the Israeli army can't just crash through your door and arrest you at any time,” said Khalid Abu Mohammed, a librarian who lives in the area the Palestinians will now start policing.It will be difficult for Israel to send troops back into those areas without risk of provoking a major confrontation like that seen last September.

But as long as Hebron is divided, it is unlikely to see the changes that other autonomous Palestinian cities such as Ramallah and Bethlehem have witnessed in the past year, such as new shops and cafes on every cleaned-up corner, and once-deserted streets thronged with strollers in the evenings.

According to Palestinian political analyst Ghassan Khatib, the Israeli army will “withdraw” only to the edges of the town, “turning Hebron into an isolated canton just like the other West Bank towns.” Indeed, only hours after the redeployment was completed on Friday, Israel had sealed off every road in and out of Hebron, with a checkpoint at the spot where PA rule ended.Palestinians now need an Israeli-issued permit to travel out to Bethlehem or Jerusalem.

But the initial euphoria lingered.Palestinian police were greeted warmly when they drove into the city. “This is just the most beautiful thing I've ever seen,” said Mohammed Abu Sneineh, 87. “What a long time we waited for this.” Palestinian flags were hoisted above the old Israeli headquarters and prison, and thousands of people poured out into the streets as news spread that the soldiers were really gone.

Life is meant to be “returning to normal” in Hebron now, and indeed, streets long closed under the Israeli army's incredibly complex “security arrangements” are being reopened for the first time in years.But because the settler compound is smack in the middle of Hebron's commercial heart, Jews and Arabs will continue to be unwilling neighbors.

This is the most beautiful thing I have ever seen. ‘What a long time we waited for this.’

The greater significance of the “Hebron protocol” is the Israeli commitment to begin its redeployment from other areas of the West Bank — while pulling out of Hebron puts 100,00 Palestinians under self-rule, withdrawing from rural villages would give PAgovernance of almost a million more people.

Under the new deal, by early March Israel must begin its pullbacks from rural areas of the West Bank.Eight months later, there should be another Israeli withdrawal, so that by August 1998, a final pull-out leaves the PAin charge of all of the West bank except for Jewish settlements and “military areas.” Final status talks — on the thorny issues that were saved for last: Jerusalem, final borders, Palestinian refugees, settlements and Palestinian sovereignty — are set to start in two months' time.

The chancellor of Jerusalem's Latin-rite Patriarchate said the Israeli-Palestinian agreement on Hebron was a “very big step taken” toward peace.The chancellor, Father Adib Zomoot, said he hoped negotiations would continue in order to reach a full settlement “on all of Palestine.” Zomoot was speaking on behalf of Latin-rite Patriarch Michel Sabbah, who was abroad. “We are very happy about the agreement and very happy that Hebron will be free even if the [Jewish] settlements stay, which we see as dangerous and a reason for violence,” Zomoot said Jan.16.

Netanyahu, under heavy American pressure, has gone ahead with the Hebron redeployment. But the greater test is whether he will stick to the timetable for the next Israeli withdrawals.And Arafat, for his part, must live up to the Palestinian part of the bargain.

Stephanie Nolen is based in Jerusalem.CNS contributed to this story.