t would have been comical had it not been so tragic. There was Yasir Arafat in Ramallah on Wednesday lecturing the Palestinian legislature on the need to make the Palestinian Authority more democratic, accountable and transparent. Here was the man who had spent six years marginalizing the very group he was addressing — who had never signed the Basic Law passed by the legislature that established a separation of powers — demanding "firmer bases of democracy, rule of law, independent judiciary."

Mr. Arafat made no promises and offered no specifics in his speech. But yesterday, after a group of Palestinian legislators presented him with a list of reforms, a spokesman for the Palestinian leader announced that Mr. Arafat was willing to hold elections within six months. While that alone is hardly the most urgent step, his announcement suggested that the smoldering five-year-old effort to radically reform his corrupt and dictatorial government may have started to catch fire. Washington needs to do everything it can to encourage this development. If Palestine can become more democratic, the chances of peace with Israel will be greatly enhanced. It could also serve as a model for the entire Arab world.

There are plenty of reasons to be skeptical of Mr. Arafat's intentions and of the possibility of reform. He has concentrated power so completely in his own hands that he approves all senior officials' vacations and their per diem expenses. His justice minister got so tired of the fact that there was no judicial system that he quit. The public-sector bureaucracy is so bloated with patronage jobs that it is two to three times the size it needs to be. Five years ago a Palestinian parliamentary committee found that Mr. Arafat's bureaucracy was so riddled with corruption that it recommended it be dissolved and some of its members put on trial.

The road to Palestinian reform is clear. Mr. Arafat signs the Basic Law — passed five years ago — that establishes three separate branches of government. He reduces his cabinet size to 18 or 19. An independent judiciary is set up. The dozen security services are consolidated into one under the authority of a civilian. The ministry of finance is strengthened so that it can become accountable to the legislature and have the capacity to establish a budget and supervise expenditures. A civil service is set up in which merit outweighs loyalty. A constitution is adopted. New elections are set.

Ideally, a new parliamentary system will emerge and Mr. Arafat will end up as a figurehead president with power invested in a prime minister.

The Bush administration is sending George Tenet, the director of central intelligence, to help the Palestinians streamline their security services. That is a good step. But it must persuade Israel that, as vital as these changes are, internal Palestinian reforms have to be accompanied by negotiations over Israeli withdrawal and the establishment of a Palestinian state. Without the promise of a breakthrough on that front, the issue of occupation will again overwhelm the Palestinian agenda.