Both Israelis and Palestinians said they had bridged their differences on implementing Wye and said they would sign the revised accord Saturday evening in the Egyptian resort town of Sharm el-Sheikh.
"All the issues have been settled," lead Palestinian negotiator Nabil Shaath said late Friday.
Shaath announced the agreement as U.S. Secretary of State Madeleine Albright met with Palestinian Authority President Yasser Arafat in Gaza City. When she emerged from those talks, a smiling Albright confirmed the breakthrough.
"They have really seized, I believe, a historic opportunity," Albright said at a news conference.
"Working intensively, the Israelis and Palestinians solved problems together, negotiated solutions together and began to re-establish trust and confidence in each other," she said.
U.S. President Bill Clinton, who returned to Washington Friday from a two-week vacation, said lasting peace in the Mideast "is now a step closer" because of the deal. "This is truly a new beginning," Clinton said in a written statement.
Prisoner issue resolved
Though the two sides had reportedly settled most issues earlier in the week, negotiations stumbled on the release of Palestinian prisoners in Israeli jails. The Palestinians had been insisting on no fewer than 400 prisoners freed; Israel had refused to release more than 350.
Another sticking point was a clause in the agreement barring the two sides from taking unilateral steps in the West Bank and Gaza.
Israel apparently had sought guarantees that Arafat not declare statehood unilaterally before the two sides had negotiated a permanent peace agreement.
Shaath said Arafat finally accepted the Israeli proposals after receiving assurances from Albright that the United States would hold Israel to its commitments under the new accord.
A spokeswoman for Israeli Prime Minister Ehud Barak said Arafat called Barak during his meeting with Albright to accept the new Wye plan.
Barak was quoted by the spokeswoman as telling Arafat he saw the agreement as a step toward creating trust between the two sides and that he hoped it would provide fresh impetus for the peace process.
Israeli Foreign Minister David Levy on Friday billed the deal as the opening of a new era that will "bring an end to this tragic situation" and lead to future deals with Syria and Lebanon.
Plan calls for final peace treaty in September 2000
The revised Wye memorandum includes specific deadlines for implementing the accord. Under the plan:
Israel will relinquish another 11 percent of the West Bank to Palestinian control over five months, giving the Palestinian Authority complete or partial control of 42 percent of the territory.
Israel will release 350 prisoners — 200 immediately and another 150 in October.
The two sides will establish a framework of final peace talks by February 15, 2000, with a goal of signing a permanent accord by September 2000.
The Palestinians can begin building their own seaport in Gaza.
Israel will guarantee safe passage corridors for Palestinians between Gaza and the West Bank.
The Palestinians will implement security commitments including the collection of illegal firearms, the arrest or detention of Palestinian fugitives and providing Israel the names of all Palestinian police.
Shaath said Israel also promised to free another "significant" number of prisoners during the Islamic holy month of Ramadan, in December, and yet another release before the end of the year. He said Israel would also establish a committee to consider further releases of Palestinian inmates.
High hopes of restored trust
Albright’s trip to Jerusalem capped two days of marathon diplomatic efforts that began with her arrival in Egypt on Thursday. She came as a witness to the signing ceremony, which was originally planned for Thursday evening in Alexandria, and ended up as a mediator in talks with Barak.
If signed according to plan, the deal will be the first between Barak and Arafat. Both sides had hoped to restore the trust damaged during the three years Barak’s predecessor, Benjamin Netanyahu, held office.
Although Netanyahu signed the Wye accords in 1998, his government froze their implementation, accusing the Palestinians of violating the deal. Barak has promised to restart the peace process.