West Bank Dilemma: 2 Peoples, 1 Land : Occupied areas: A Palestinian finds himself hemmed in by Jewish settlers. It’s a microcosm of a key peace issue facing Baker, who arrives today.

BEIT IJZA, Israeli-Occupied West Bank — Sabri Gharib’s farm was once this village’s jewel, 35 acres of grape vines, peaches, wheat, even a few rose bushes wrapped luxuriantly around the crown of a hill. Atop the hill stood Gharib’s house, its windows open to a dizzying blue circle of sky.

Then a creeping line of red-tile roofs began making its way up the hill, and occupants of the new Jewish settlement below claimed 25 acres of Gharib’s farm for their new Givon Hadashah community. When children from Beit Ijza began throwing stones at the new settlement, the settlers built a fence across the brow of the hillside, behind Gharib’s house. Gharib tore it down. The settlers put it up again. He pulled it down again.

The 52-year-old Palestinian farmer was arrested, and when he emerged from jail a year ago, it was to a distinctly different version of paradise. His hilltop home now is closely surrounded on three sides by a towering fence of chain link and concertina wire, reachable only by a narrow path up the hill. The path itself is enclosed by more fence.

The Gharibs’ house has become their prison, a small, stone testament to a village that refused to be displaced.

“The way they are spreading, they will fill the mountain with settlers,” shrugged Gharib’s wife, Umm Samir. “What I’m afraid of is they will build so much, there will be no room left for anybody.”

As U.S. Secretary of State James A. Baker III arrives in Israel today on what may be his final attempt to negotiate a resolution to the Arab-Israeli conflict, it is the issue of Jewish settlements in the territories Israel occupied after the 1967 war that U.S. officials fear could be among the greatest obstacles to peace between Arabs and Jews.

In the weeks since Baker began his round of Middle East talks, bulldozers and cranes have sprung to life in the West Bank, flattening building pads around existing settlements, laying a highway primarily for Jewish settlers between Jerusalem and the Arab city of Hebron and preparing ground for new settlements and additions that some predict will bring 20,000 new Jewish settlers to the West Bank next year.

Sunday night, Umm Samir said, trucks rumbled through the night at a site across from the Givon Hadashah settlement; by Monday morning, 15 new blue-and-white mobile homes were perched on concrete blocks, and dozens more blocks had been laid on the flatlands around the site.

At the three-week-old Revava settlement, 27 miles northwest of Jerusalem near the Arab city of Nablus, Palestinian workers sweated in the noon sun, digging trenches to lay sewer pipe for a Jewish community with 10 families, 30 mobile homes, a portable electrical generator and a single mobile telephone.

“These new settlements, they are constructing them in a race for time before the negotiations start,” grunted one of the men, who refused to be identified. “These are obstacles they put in front of the Palestinian people. Look at the work we are doing here: It is an infrastructure. It is permanent.” An Israel Defense Forces guard walked up, gun slung across his back. The man went back to work. “If it bothers us or it doesn’t is irrelevant,” he said before he left. “What’s important is to have a job, and to work.”

New statistics released this week show that the settler population in the occupied territories grew 12% last year, more than twice the rate of previous years.

Already, there are an estimated 105,000 Jewish settlers, in addition to 1.7 million Palestinian residents of the West Bank and Gaza Strip; as much as half the land in the West Bank has been dedicated by Israeli authorities for Israeli use. Housing Minister Ariel Sharon has pledged to build 13,000 new housing units in the territories by 1993.

In the delicate negotiations for resolving the Palestinian conflict, opponents on both sides concede that the settlements amount to “facts on the ground” that will be difficult to ignore in any attempt to persuade Israel to give up territory for peace.

More than $2 billion in government funds were invested in settlements in the occupied territories between 1968 and 1985 alone, the independent West Bank Data Base Project reports. The Housing Ministry is spending about 20% of its funds in the territories on behalf of settlers, according to its most recent budget, which sets aside about $180 million for apartments and houses and about $30 million for mobile homes.

Baker, when told of the new Revava settlement, said he was “disappointed” and added that it “points up very visibly that it is easier to obstruct peace than to promote peace.”

Israeli Prime Minister Yitzhak Shamir made what first appeared to be a conciliatory statement on the settlements last week, saying they would be subject to negotiation in peace talks aimed at resolving the conflict. But his aides emphasized that the settlements would be one of the last subjects up for discussion, and a number of the country’s right-wing Cabinet ministers have come to the defense of the settlements in the past several days.

The settlements “speak stronger than any thesis, any political discussion,” against those seeking to pressure Israel, Defense Minister Moshe Arens said. Sharon led a group of right-wing Knesset members on a tour of proposed new settlement expansions near Jerusalem, after which Knesset member Michael Eitan, head of the Eretz Yisrael (Greater Israel) Front, declared: “We saw very beautiful things being done. Mountains are being moved, the whole environment is being changed.”

Many Orthodox Jews see the settlements not just as cheap housing for young Tel Aviv and Jerusalem professionals looking to get out of the city. They are milestones in the biblical lands of Judea and Samaria.

Caroline Tabach, 23, a new resident of Revava, pulls an atlas down from a shelf in the tiny living room of her mobile home and opens it to a country labeled “The Holy Land.” She points out the site of Rachel’s tomb in Bethlehem, and Shiloh, site of a Jewish temple. But she says the real reason she decided to move from the coastal plains near Tel Aviv was to build a new community with neighbors who think as she and her husband do.

Revava, she said, will have a community feel similar to a kibbutz, except that all the settlers will own their own homes and drive to work in Tel Aviv every day. Already, all the children are assembled in a single day-care center in one of the mobile homes; the community gathers at night for meetings, singing and religious lectures, she said.

Leah Filber lives in a shack at a new settlement nearby, next to the site where she and her husband are building their home. “If they decide that we should give them back, then we will leave the house,” she said. “It’s a democracy. I will obey the law. But for the time being, it’s the land of Israel, and I will live in it. In my opinion, at the end of this thing, we will . . . keep the land where the Jews are, and we will give up part of the land to them.”

Umm Samir is not so sure, watching the number of tile roofs multiply and creep up the side of the hill. Settlers often urinate through the fence, she said, and drive their jeeps up to the side of the house late in the day, playing loud music.

Umm Samir said the arguments have gone on for nearly a decade.

“God knows what will happen next,” she said. “My husband is in Jordan now. But I know him. He will come back, and he will do it. He will take the fence down again.”