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ISRAEL VOWS TO DELAY TALKS WITH PLO ON PERMANENT SETTLEMENTS UNTIL ’96

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Prime Minister Yitzhak Rabin, taking a tough stance on the key issue of Israel's hold on Jerusalem, said Tuesday talks on a permanent settlement with the Palestinians would begin in 1996.

Rabin was reacting to Palestine Liberation Organization leader Yasser Arafat's demand on Monday for immediate talks on the status of the holy city. Arafat said talks were needed now because Israel recognized last week Jordan's special role at Jerusalem's Muslim shrines.Rabin told reporters the Israeli-PLO peace deal signed in September in Washington specified talks on a permanent agreement within two years of implementation of Palestinian self-rule in Gaza and Jericho "which means the middle of May '96."

"All the issues - settlements, borders, permanent arrangements, Jerusalem - are issues to be negotiated only then, only then," Rabin said.

Palestinian officials were furious last week when a historic Israeli-Jordanian accord signed in Washington said the Jewish state would give high priority to Jordan as guardian of Jerusalem's Moslem shrines in talks on the city's final status.

Palestinians view Arab East Jerusalem, captured by Israel in 1967 and later annexed, as the capital of a future state. Israel has vowed never to cede any part of the city.