Taba verdict: boost to Israel-Egypt ties? Israel must return Taba - a tiny strip of beach - to Egypt. The decision comes amid a heated election campaign and Israel's parties blamed each other for the loss.

Unofficial reports that a panel of arbitrators will award a contested sliver of Red Sea beachfront to Egypt may at last remove a major stumbling block to improved relations between Israel and Egypt. But indications that Israel will have to relinquish Taba, which it seized from Egypt during the 1967 Arab-Israeli war, has added fuel to an already bitterly contested national election campaign in Israel.

News of the arbitration decision was broadcast on Israeli radio and television yesterday. A formal announcement of the decision is expected tomorrow in Geneva.

The disputed patch of Sinai sand, where Israel has built a resort hotel and a vacation village, became a charged issue in relations between Israel and Egypt.

For Egypt, it has epitomized Israel's failure to live up to the 1979 Camp David treaty that for 10 years disrupted Cairo's relations with the Arab world. Israelis, who returned the Sinai to achieve peace with Egypt, say it is unreasonable for Egypt to insist on the last square mile.

The Taba issue was submitted to a panel of five Geneva-based arbitrators 16 months ago, after Egypt and Israel failed to resolve the issue through negotiations.

Spokesmen for Israel's conservative Likud bloc say the decision highlights the risks of what they characterize as Labor's penchant for negotiating away Israel's vital interests, reflected in the party's call for an international peace conference to resolve the Arab-Israeli dispute.

Likud Minister Moshe Arens said that Labor leader and Israeli Foreign Minister Shimon Peres ``is the cause of losing Taba without any form of compensation'' for ceding to Egypt's demand for binding arbitration.

``The moment we agreed to this, we lost Taba,'' Mr. Arens said.

Labor party sources respond that it was the Likud that squelched a recent US-brokered compromise that would have allowed Israel to retain effective control over Taba's resort facilities in return for acknowledging Egyptian sovereignty over the disputed square-mile strip on the Gulf of Aqaba.

Egypt has agreed to play down the decision to avoid turning it into a major election issue in Israel, according to Israeli press reports. For months the conventional wisdom has been that recriminations over ``who lost Taba'' would become a hot topic in the election campaign.

But the issue, while a source of dissatisfaction among Israeli voters, has largely been overshadowed by the nine-month Palestinian uprising. Moreover, months of rumors that the Geneva panel would award Taba to Egypt have conditioned Israeli public opinion for tomorrow's announcement.

Foreign policy analysts say that whether tomorrow's announcement relaxes or inflames relations between Egypt and Israel will largely depend on how quickly Israel agrees to implement the decision.

Yesterday, a Foreign Ministry spokesman insisted Israel would ``respect the verdict as it is to the letter and spirit.''

A senior source in the prime minister's office also said Israeli would ``respect the decision,'' but stopped short of endorsing the prediction of another senior official, who told a Jerusalem Post reporter that the Geneva decision would be ``unequivocal'' and that Israel would not ``maneuver'' to retain control over some portion of Taba.

Reports attributed to the prime minister's office have suggested that Israel might seek to circumvent the arbitration decision - which designates the correct desert border markers - by contesting the exact boundary between the markers and the sea.

Following tomorrow's announcement, Israel will have 21 days to seek needed clarifications of the arbitral decision. After that, say Foreign Ministry sources, Israeli and Egyptian representatives may meet to negotiate for the two privately owned resort facilities.

Mr. Peres and Egyptian Foreign Minister Esmat Abdel Meguid are expected to hold talks in New York on carrying out the agreement following tomorrow's announcement.

Ownership of the tiny patch of desert has been in dispute since two colonial powers, Turkey and Britain, first contested Taba in 1906.

After Israel withdrew from the Sinai following the signing of the Camp David treaty, it retained Taba, claiming that turn-of-the-century British maps placed part of the disputed area in Palestine, not Egypt.

Egypt's claim is based on border markers designated following a 1949 armistice agreement between Israel and Egypt.

Following months of painstaking negotiations and a meeting in 1986 between Egyptian President Hosni Mubarak and Peres, then Israel's prime minister, the two sides agreed to submit the issue to binding arbitration.