GRUDGINGLY, IN TINY increments and years late, Israel is giving up the land that Palestinians hope to make a state of their own.

The latest agreement, reached only through the personal intercession of President Clinton, covers just 13 percent of the West Bank but revives a peace process that stalled 18 months ago when Israeli bulldozers broke ground for a new Jewish housing project in Arab East Jerusalem.It will expand the territory administered by the Palestinian National Authority from 27 percent to 40 percent of the West Bank. But the PNA will have full control over only 18 percent while sharing control with Israeli security forces over the other 22 percent.

This is the first of three redeployments that should have been completed by now. The other two are still up in the air, as are "final status" talks that were supposed to settle such sensitive issues as Jewish settlements, Palestinian statehood and the future of Jerusalem by May 1999 - the end of the five-year period of Palestinian autonomy envisioned in the interim Oslo accords.

The Palestinians assumed - and Israel's then Labor-led government did nothing to disabuse them of the notion - that autonomy would lead to statehood. And although the Oslo timetable slipped almost as soon as the first accord was signed in September 1993, neither suicide bombings by Palestinian terrorists nor the assassination of Israeli Prime Minister Yitzhak Rabin by a Jewish fanatic deterred Rabin's successor, Shimon Peres, from relinquishing occupied territories captured in the 1967 Arab-Israeli war.

By the time Likud's Benjamin Netanyahu became prime minister in 1966, Israel had ceded seven West Bank towns and most of the Gaza Strip to Palestinian self-rule.

Netanyahu soured the atmosphere by lifting a freeze on Jewish settlement building on Arab land and delaying Israel's withdrawal from an eighth West Bank town, Hebron. Israeli forces were supposed to vacate 80 percent of Hebron immediately after the May election but did so only in January 1997.

A "Note for the Record" attached to the Hebron protocol by U.S. envoy Dennis Ross committed Israel to further redeployments beginning in March 1997. And a letter from then Secretary of State Warren Christopher to Netan-yahu, also attached, stipulated that "all three phases of the further redeployments should be completed within 12 months of the first phase, but no later than mid- 1998."

Netanyahu met the March 1997 deadline by offering to withdraw from 9 percent of the West Bank, but Yasser Arafat's government rejected that as insufficient. The Palestinians wanted each of the three redeployments to cover 30 percent, which Netanyahu called unrealistic.

The 9 percent withdrawal was never carried out and the peace process became moribund after Netanyahu authorized work to begin on the Har Homa housing project in an Arab quarter of East Jerusalem.

Our State Department, now headed by Madeleine Albright but still using Ross as its point man in the Middle East, came up with a 13 percent compromise that the Palestinians accepted four months ago. But Netanyahu held off, citing security concerns, and did not accede until a meeting with Clinton on Monday.

Although the land area is small, the price of agreement is high for both sides.

Netanyahu risks a revolt by hard-line coalition partners who oppose giving any land to the Palestinians.

Arafat had to give Israel yet more security guarantees, risking a backlash from Islamic militants opposed to peace with the Jews. While Netanyahu says he's not doing enough to curb terrorism, the Palestinian leader is derided by his own people for allowing himself to become "Israel's policeman," and his popularity has sunk to 32 percent.

Arafat also had to promise that he will not declare statehood in May 1999, as he has threatened to do, unless "final status" talks are completed with Israel. There is little chance of that happening, which means a continuation of the "limited autonomy" that Palestinians find so galling and further postponement of their dream of nationhood.