Israel OKs U.S. Peace Plan, Seeks Guarantees : Mideast: The Inner Cabinet ‘assumes’ talks will be limited to non-PLO residents. Secretary of State Baker predicts a ‘long, difficult process.’

Israel has agreed to open peace talks with Palestinians as long as the United States guarantees that none of them belong to the Palestine Liberation Organization, Israeli officials said Sunday.

Israel’s policy-making Inner Cabinet made the demand on Washington on Sunday as it formally accepted a five-point plan drafted by Secretary of State James A. Baker III designed to get talks under way.

The Inner Cabinet approved Baker’s plan on the “assumption” that the Bush Administration would limit participation to non-PLO residents of the occupied West Bank and Gaza Strip and also restrict the subject of the talks to Israel’s election plan for the territory.

The guarantees against PLO participation and on the scope of the talks must be put in writing, according to Yosef Ben-Aharon, a top aide of Prime Minister Yitzhak Shamir.

“What was left unclear in the five points will have to be clarified in an accompanying document,” Ben-Aharon said.

Foreign Minister Moshe Arens asserted that, based on recent conversations he has had with Baker, he expects him to give into Israel’s demands.

“In the contacts that I have had with Secretary Baker this past month, we discussed the detailed wording of the five points that have been modified, plus additional assurances that Secretary Baker, in principle, is ready to give,” Arens said.

Nonetheless, Arens cautioned against quick progress. “We are talking about very complicated matters, not at all simple,” he said. “It has already taken us a month to arrive at this point, so I don’t want to be too optimistic.”

Baker, who is attending a conference of Pacific Rim nations in Australia, said during a break in the meeting that the Israeli action “is just the first of what will probably be a very long and complicated and difficult process.”

Asked if he would give Israel the written assurances it is seeking, Baker said, “Well, we’ll have to look at the detail of that.”

However, Baker added that “we are very pleased that they accepted the general framework. . . . We’re pleased with the results so far.”

Earlier, State Department spokeswoman Margaret Tutwiler, who is in Canberra with Baker, told reporters that “we are waiting to hear from the Egyptians.”

There was no immediate response from the Cairo government, which has offered to host Israeli-Palestinian talks.

Prime Minister Shamir is scheduled to visit the United States next week, and his government’s indecision over the Baker plan was casting a shadow over the trip. In apparent reference to the problem, Shamir said approval of the Baker plan was needed to show that Israel was “doing everything not to hurt our relations with the United States and to achieve a peace we can live with.”

A nearly two-year-old uprising in the territories has prompted the search for a peace formula.

In his five-point program, Baker had invited the Israeli representatives to meet with officials from the United States and Egypt in order to draw up a list of members for a Palestinian peace panel. The Palestinians and Israelis would then negotiate terms for elections in the West Bank and Gaza Strip. Israel had demanded a clear veto on the makeup of the Palestinian delegation, a request Baker was unwilling to meet--although he made minor changes in wording to narrow the talks’ scope.

The Israeli government opposes talks with the PLO because the group wants to set up an independent state alongside Israel that, in Israel’s view, would threaten the security of the Jewish state.

Besides barring the PLO and limiting the agenda, Israel is asking the United States to back Israeli actions should talks not work out. Israel also has asked that the Cairo talks not be open-ended; one meeting in Cairo would be followed by others only if Israel is satisfied with the initial results.

The decision to formally adopt Baker’s plan followed a weekend of heavy wrangling between top officials of the two main partners in Israel’s ruling coalition, Shamir and Arens from the right-wing Likud Party and Finance Minister Shimon Peres and Defense Minister Yitzhak Rabin from the centrist Labor Party.

All six Labor members in the Inner Cabinet voted to accept Baker’s plan and approve the conditions; three of the six Likud ministers, including Shamir, also voted yes. Three Likud members voted no. The trio--hawkish ministers Ariel Sharon, Yitzhak Modai and David Levy--see the talks a preliminary to contact with the PLO.

Sharp disagreements within and between the parties--Labor has threatened to pull out of the coalition several times--had made it difficult to reach any decision on the Baker plan.

Likud opposes giving up sovereignty over the territories, home to 1.7 million Palestinians, and is wary that Baker’s plan might trap Israel into talks with the PLO. Labor is willing to take a chance that, should the PLO show up for talks, Israel could walk away.

After the vote, Shamir assured his followers, “As long as we are in the government, there will be no Palestinian state and no contacts with the PLO.”

Last month, Baker presented what American officials called “a non-paper” of five points to bring Israeli and Palestinian peace delegates together. That offer followed a 10-point list of “clarifications” put forward by Egyptian President Hosni Mubarak, who invited Israeli officials to meet with the Palestinians in Cairo.

The meeting with Palestinians is meant, according to Israeli officials, to discuss “modalities” of elections designed to select yet another Palestinian negotiating team. The elected team would work out with Israel details of an “interim arrangement” for the West Bank and Gaza Strip. After three years, more talks would be held to reach a final solution for the land and its inhabitants.

In any case, the series of proposals have all faltered on the question of who will represent the Palestinians in talks. Under the Israeli election plan, announced by Shamir in May, only non-PLO Palestinians living in the occupied territories would participate.

However, both the United States, which is Israel’s staunchest ally, and Egypt, the only Arab country to recognize Israel, have been talking with the PLO about Shamir’s plan. Baker has insisted that Washington does not intend to pressure Israel to deal with the PLO. Mubarak, on the other hand, has said PLO participation was a key to getting talks under way.

It is this contradiction that the Inner Cabinet’s demands are meant to clear up, Shamir aide Ben-Aharon said.

Meanwhile, the PLO was being doubly cagey. Its executive committee, headed by PLO Chairman Yasser Arafat, met over the weekend in Cairo to discuss Baker’s plan. The group reached a decision, news reports said, but left town without announcing what it was.

Times staff writer Norman Kempster in Canberra, Australia, contributed to this story.