Jerusalem, Dec. 3-(AP) A demographic study released Tuesday shows the Jewish population outside Israel is declining and predicts Arabs will outnumber Jews by the year 2020 in Israel and the Palestinian territories.

The survey, commissioned by a new Jerusalem-based institute chaired by former Mideast peace negotiator Dennis Ross, says the world Jewish population stands at 12.8 million, with 5 million in Israel and 7.8 million elsewhere. While the number of Jewish Israelis has doubled since 1970, boosted by a million immigrants from the former Soviet Union, the Jewish population overseas has shrunk by 2.2 million, much more than the number of emigrants to Israel.

The largest Jewish community outside Israel is in North America, where the survey showed a population of 5.6 million, virtually unchanged over the past 32 years. Professor Sergio DellaPergola, head of the division of Jewish demography and statistics at Jerusalem's Hebrew University, said the Jewish population abroad had been subject to the same factors as non-Jewish groups--increased rates of divorce and a decline in marriages reducing the number of births.

In addition, he wrote in the survey's introduction, large numbers of Jews abroad were marrying non-Jews, and in most cases their children were not identified as Jewish. In Israel, government statistics show the Jewish population is growing at a slower pace than that of the Muslim and Christian Arab communities.

The survey, commissioned by the Jewish People Policy and Planning Institute, predicts that by 2020 there will be 6.3 million Jews and close to 2 million Arabs in Israel, with another 5.6 million Arabs in the Palestinian territories. Those figures, it says, have serious implications for Israeli policy. "Demography is deeply intertwined with the Palestinian-Israeli conflict," DellaPergola said.

Former Israeli prime minister Ehud Barak, who was willing to give the Palestinians an independent state on most of the West Bank and Gaza Strip and parts of east Jerusalem, argued such a policy was essential to retain a Jewish majority in a democratic state of Israel.

Some hard-liners in the government of Prime Minister Ariel Sharon want Israel's borders to include the entire Holy Land, and favor expelling the 3 million Palestinians who live there.

In September, the government-funded Israel Council for Demography was revived after being dormant for five years. Its mandate is to encourage Jewish households to have more children, using incentives such as housing benefits and other government grants. The council also seeks to discourage Jews from abortion and intermarriage. Critics charged that reactivation of the council amounted to racism.

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