Shamir OK of U.S. Peace Talks Plan Told : Mideast: Israeli TV says acceptance of Baker’s formula on Palestinian delegation could keep Labor in coalition.

Prime Minister Yitzhak Shamir has agreed to a compromise American formula for selecting a Palestinian panel to preliminary peace talks, Israeli Television reported Saturday night.

Acceptance by Shamir and his rightist Likud Party could revive the stalled peace process and forestall a threat by the Labor Party, Likud’s coalition partner, to bolt the unity government.

“Prime Minister Yitzhak Shamir will give a positive response to the American question on the composition of the Palestinian delegation, senior Likud and Labor sources said this evening,” the television report said.

The report was broadcast as Shamir and his loyal Cabinet ministers were discussing the deadlock at the prime minister’s home. There was no immediate confirmation from the Likud leadership.

“They (Israeli Television) must know more than we do,” declared Avi Pazner, Shamir’s spokesman. “I don’t understand on what they base their report.”

“We will see tomorrow (today),” when Shamir is scheduled to meet with Labor Party leaders, Pazner said.

Israeli Army Radio, in a later broadcast, also said Shamir would propose acceptance of the American formula, a move bitterly opposed by the right wing of his party. The opponents, led by former Industry and Commerce Minister Ariel Sharon, reject any peace talks with Palestinians. Sharon’s supporters in the Cabinet boycotted the Saturday night talks.

The television report said Shamir’s acceptance would be conditional on a pledge by the Labor Party to withdraw its threat to leave the coalition if the stalemate on the peace talks were not broken. “We have to make our national choice,” Labor Party leader Shimon Peres said Friday, reasserting a Wednesday deadline for a decision.

According to the report, the embattled prime minister agreed to accept a delegation to preliminary peace talks of Palestinians registered as residents of the occupied West Bank and Gaza Strip. Under the formula proposed by Secretary of State James A. Baker III, that wording could include Palestinians who had been deported from the occupied territories and those who keep an apartment or office in East Jerusalem in addition to their home in the territories.

But according to the television report, Shamir is accepting only the general wording “registered as residents,” which may deflect some of the anticipated opposition from the Likud right wing, Jewish settlers in the occupied territories and other groups opposed to the peace process.

The Palestinian delegation would be selected at a proposed Washington meeting of Baker, Israeli Foreign Minister Moshe Arens and Egyptian Foreign Minister Esmat Abdel Meguid. The Egyptians would front for Yasser Arafat’s Palestine Liberation Organization, with which the Israelis refuse to deal directly. Israel would retain the right to reject any Palestinian candidate, the television report said.

Selection of the delegation would be the first step in a long process toward achieving a peace plan put forward by Shamir last April. The delegation would work out with the Israelis the procedures for a later election of Palestinian representatives. Talks between that group and the Israelis would determine the future status of the occupied territories.

There have been no official talks between Israelis and Palestinians for more than 20 years, since Israel conquered the occupied territories in the 1967 Arab-Israeli War.

Today’s meeting of the so-called Forum of Four--Shamir and Arens for Likud and Deputy Prime Minister Peres and Defense Minister Yitzhak Rabin for Labor--will set the stage for a full Cabinet meeting on the peace talks issue Wednesday. If the American formula is accepted by the Cabinet, Baker is expected to issue invitations for the Washington meeting, putting the peace process back on the rails.

The PLO has insisted, among other things, that the Palestinian delegation include representatives from East Jerusalem, which was annexed by Israel after the 1967 war. That issue has become the most explosive on the tortuous path to the talks. Israeli rightists insist that including East Jerusalem Palestinians in the delegation would raise questions about the legitimacy of the annexation.

Another longstanding PLO demand calls for the establishment of a Palestinian state in the occupied territories, opposed by politicians in both Likud and Labor.

The television report made no mention of the agenda of the proposed Washington talks, beyond selection of the Palestinian delegation. The PLO has called for an open-ended discussion of all issues once the Palestinian representatives are chosen and sit down with their Israeli counterparts in what would be the first meeting of the opposing sides on the confrontation that has racked the Middle East for decades.

President Bush, asked about the report from Israel, said, “We have been working on this for eight months.”

Speaking at a news conference in California after his summit meeting with Japanese Prime Minister Toshiki Kaifu, Bush said he had no details, but “I hope it’s true and I hope we can move forward.”

Asked whether progress had actually been made, he said, “Well, there has over the months. But just like the real world, you take two steps forward and take one step back. I hope we’re going to go forward now.”

Times staff writer James Gerstenzang, in Palm Springs, contributed to this story.