Bush Suspends Talks With PLO : Terrorism: President assails the organization’s failure to denounce a splinter group’s raid on an Israeli beach.

President Bush on Wednesday suspended the 18-month-old U.S. dialogue with the Palestine Liberation Organization in response to the foiled Palestinian guerrilla landing on an Israeli beach last month.

“We’ve given the PLO ample time to deal with this issue. To date, the PLO has not provided a credible accounting,” Bush said at a news conference.

White House officials said that Bush is prepared to resume the talks with the PLO once the organization denounces the raid--which a PLO faction known as the Palestine Liberation Front claimed to have carried out--and disciplines the splinter group.

The low-key dialogue with the Palestine Liberation Organization began in December, 1988, when U.S. Ambassador Robert H. Pelletreau Jr. met with a PLO representative in Tunis.

The path for that meeting was cleared when Yasser Arafat, the PLO chairman, acknowledged Is rael’s right to exist and renounced the use of terrorism. Until he took those steps, U.S. policy forbade official contact with representatives of the key organization representing Palestinians in the Middle East.

But ever since the terrorist raid on a beach near Tel Aviv on May 30, Bush has been under increasing pressure from Congress, Israel and Israel’s supporters to suspend the talks. Israeli forces intercepted the guerrillas on land and in the speedboats they used to approach the shore. Four guerrillas were killed and 12 captured.

“The size of the force and the geographical target area strongly indicate that civilians would have been the target,” Bush said.

A spokesman for the Palestine Liberation Front, claiming responsibility for the raid shortly after it occurred, said that it was intended to “avenge” the killings of seven Palestinian day laborers in the town of Rishon Le Zion, south of Tel Aviv, by an Israeli gunman May 20.

The front is led by Mohammed Abbas, also known as Abul Abbas, a member of the PLO Executive Committee. His organization is one of the more radical wings under the PLO umbrella and also one of the smallest. In 1985, it planned and executed the hijacking of the Italian cruise liner Achille Lauro, during which an American passenger, Leon Klinghoffer, was killed.

Despite the pressure on Bush, Administration officials had clearly sought to avoid the rupture out of concern that it would cut off what had been seen as a useful--if not overtly productive--contact with some of the most important players in the Middle East.

Pelletreau, the U.S. envoy to Tunisia, had met at least six times in “intense discussions” with PLO representatives since the raid, and Bush held off suspending the talks “to give them time to do what we want: denounce the act and discipline the guy who did it,” said a White House official, speaking on condition of anonymity.

According to the White House official, the PLO said that it was unable to “dictate” to each of its member factions and that it, too, had to pay heed to “domestic pressure” from among its constituent groups and Arab supporters.

But when the delay in action failed to produce the desired results, the Administration believed that it had no options left and it sent word to the Palestinians and Israel early Wednesday morning that it was about to act.

On Capitol Hill, the leaders of both parties were quick to praise Bush’s decision to suspend the dialogue with the PLO.

“The President had no choice but to suspend the dialogue,” said California Rep. Mel Levine (D-Santa Monica), a member of the House Foreign Affairs subcommittee on Europe and the Middle East. “When the United States blinks at terrorism, it just encourages those who engage in terrorism.”

Rep. Larry Smith (D-Fla.), one of the most anti-PLO legislators on Capitol Hill, said he will push for passage of a bill that would prevent the President from resuming the dialogue unless both the PLO and all of its constituent factions renounce terrorism and publicly recognize Israel’s right to exist.

Senate Minority Leader Bob Dole of Kansas, who in recent months has emerged as one of the Senate’s sternest critics of Israeli Prime Minister Yitzhak Shamir’s government, said: “The ball is in the PLO’s court. It must unequivocally condemn the recent terrorist attack. It must discipline those responsible, starting with Abul Abbas.”

Secretary of State James A. Baker III, on his way to East Berlin for German reunification talks, said that suspension of the U.S.-PLO dialogue could be a setback for the Arab-Israeli peace process.

Baker said the PLO, as a result of its contacts with Washington, had given tacit approval to peace talks between Israel and a delegation of Palestinians from the West Bank and Gaza Strip.

He said “it remains to be seen” whether the PLO will withdraw its approval as a result of Bush’s decision to terminate the dialogue.

In private, U.S. officials said they hope the rupture will not last long.

“We don’t want this to be a protracted suspension. We hope it is a temporary move,” a State Department official said. “The shorter the better for the Middle East peace process and all parties concerned.”

Speaking to reporters during a day that included a visit to the George C. Marshall Space Flight Center, and two speeches at political fund-raising events here and in Charlotte, N.C., Bush said:

“I have decided to suspend the dialogue between the United States and the PLO, pending a satisfactory response from the PLO of steps it is taking to resolve problems associated with the recent acts of terrorism.”

He acknowledged that the PLO, an umbrella group made up of often-warring factions, has disassociated itself from the attack and has condemned attacks against civilians.

“This alone is not sufficient,” the President said.

He added that “we are prepared to promptly resume the dialogue” once the Palestinian organization takes “the necessary steps”--meaning once the PLO denounces the raid and disciplines Abbas.

The move comes at a particularly bleak period in the effort to revive the stalled Middle East peace process.

Shamir’s new Israeli government has taken a hard line against talks with Palestinian representatives and has vowed to press ahead with the establishment of new settlements in the occupied territories.

But a week after Baker expressed irritation with the delays in the peace process--an irritation that was taken as a slap at Israel--Bush’s move serves to restore a measure of public balance. When the action Wednesday is linked with Baker’s remarks a week ago, the Administration, in effect, has demonstrated dissatisfaction with both sides.

Even though specific gains from the talks in Tunis were difficult to enumerate, Bush said the mere fact that a dialogue about Middle East politics and security was taking place represented progress.

Times staff writers Robin Wright and Michael Ross, in Washington, and Norman Kempster, with Baker, contributed to this report.

REACTION FROM MIDEAST--Israel hails U.S. move; Arabs call it a blow to peace. A24