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Israeli Prime Minister Benjamin Netanyahu, who slowed Mideast peacemaking and froze budding ties with the Arab world, was soundly defeated in elections Monday by Ehud Barak, a former general who promised to resume peace talks.

A tearful Netanyahu, 49, conceded defeat just half an hour after exit polls projected Barak winning by a wide margin in Monday's elections, and he said he also would step down as leader of the Likud Party.Barak promised to heal the divisions among Israelis and be a leader for all the people.

``It is my intention to be everyone's prime minister. Whatever the differences of opinion between us, we are brothers,' he told supporters at a Tel Aviv hotel.

President Clinton called Barak to congratulate him, and the two pledged to restore U.S.-Israeli ties that had suffered under Netanyahu, said Alon Pinkas, a Barak aide.

Palestinian leader Yasser Arafat - who urged Israelis on Monday to ``elect peace' - watched the TV broadcasts at his seaside headquarters in Gaza City and met with U.S. diplomats to discuss the results.

``I respect the choice of this democratic election, and I give my best wishes to Mr. Barak,' a smiling Arafat said.

With 92 percent of the vote counted, Barak led with 56.1 percent to 43.8 percent for Netanyahu. Parties aligned with Barak would have 51 seats in the 120-member parliament, while Netanyahu's allies would total 53, with the remaining seats belonging to centrist parties that could go either way.

The election for prime minister and parliament capped an acrimonious five-month campaign fraught with tensions between groups of Jews and recriminations that often overpowered debate on Israel's ostensibly most pressing issue - Palestinian statehood.

The growing animosity between secular Israelis and the ultra-Orthodox community was a recurring theme.

Netanyahu claimed Barak was an elitist who hated Israel's ``outsiders' - Russian immigrants and Sephardi Jews of Middle Eastern descent who had fueled his 1996 victory.

Barak, 57, Israel's most decorated soldier, accused Netanyahu of polarizing the nation and managed to turn the prime minister's widely perceived lack of credibility into a campaign issue.

Despite his lack of charisma and a stiff TV persona, Barak, (whose full name is pronounced EH'-hud bah-RAHK') was able to inspire enthusiasm in Israel's peace camp, which had been searching for an electable leader since the assassination of Yitzhak Rabin, a soldier-turned-peacemaker and Barak's mentor.

Just before dawn Tuesday, Barak delivered his victory speech in Rabin Square, the site where the late prime minister was assassinated in 1995 by an ultranationalist Jew trying to stop the land-for-peace agreements with the Palestinians.

``This place where our hearts were broken,' Barak said as the crowd waved posters of the late prime minister, ``I came to remember my friend and commander, Yitzhak Rabin.'

He also reiterated his campaign promises, such as withdrawing troops from Lebanon within a year and presenting any future agreement with the Palestinians to a national referendum.

Many in the square cried with joy and hugged each other. ``I'm very happy. Justice was done. It seems the country needed the last three years to see that there was no other way than Rabin's way,' said Ofer Shinar, 27, from Tel Aviv.

Barak, unlike Netanyahu, has not ruled out the creation of an independent Palestinian state and was expected to quickly carry out the West Bank troop withdrawals Netanyahu held up.

Barak was named interior minister by Rabin in 1995, and he became foreign minister after Rabin's assassination. He was elected Labor Party leader in 1997.

Under his One Israel umbrella group, Barak also was able to unite Sephardic politicians and moderate religious leaders.

In the final days of the campaign, there was a sense that many Israelis who had backed Netanyahu in 1996 in anger over a rash of suicide bombings by Islamic militants were ready to trust Barak with negotiating the terms of Palestinian statehood.

In his speech conceding the election, Netanyahu said his government almost completely ended terrorism, continued the peace process and reduced unemployment. He congratulated Barak on his victory.

``This is how it has to be in a democracy,' Netanyahu said. The Palestinians' top peace negotiator, Saeb Erekat, welcomed Barak's victory, saying the Israeli people sent a message that ``they want to make peace.' Labor Party activists broke out in wild cheers when the TV exit polls were broadcast. ``He won, he won, he won,' Barak supporters chanted as they grabbed each other by the shoulders and danced in circles. The final unofficial results were expected by 8 a.m. (1 a.m.) Tuesday - after paper ballots from more than 7,000 polling stations have been counted by hand. Some 79 percent of the 4.29 million eligible voters cast ballots. Barak has 45 days to form a coalition and submit it to the Knesset. If he is able to form a stable coalition - something that eluded Netanyahu in his three years of rule - then he will be able to move more confidently in peace negotiations.

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