PLO to Probe Raid on Israel by Guerrillas : Mideast: But Palestinians denounce the U.S. suspension of talks because of the splinter group’s beach attack.

The Palestine Liberation Organization on Thursday angrily denounced the suspension of its 18-month-old dialogue with the United States as “a test to the Arabs’ will of resistance,” but it said it has agreed to investigate the guerrilla raid that led to the rupture.

In directing an investigative committee to look at the May 30 attack on an Israeli beach by a PLO splinter group, the organization’s leadership said it is “reaffirming its commitment . . . to the declaration to renounce terrorism, all forms of terrorism.”

A PLO official said the statement from the PLO Executive Committee implies that the PLO, through its governing national council, is prepared to denounce the raid and take action against the guerrilla leader who executed it--a member of the committee--if the investigation concludes that the raid violated the organization’s historic commitment renouncing terrorism.

“This is the first time that the PLO in an official statement says in relation to the beach operation . . . that if it proves to be a breach of the resolution of the PNC (Palestine National Council), it’s going to be denounced, and disciplinary actions will be taken,” said the official, who asked not to be identified.

However, in its response to President Bush’s announcement Wednesday that he is suspending the dialogue unless such denunciation and punishment occurs, the PLO also struck a defiant tone. It pledged to escalate the Palestinian uprising in the Israeli-occupied West Bank and Gaza Strip and urged international leaders to take a “responsible position” against the American decision.

“The PLO is calling for a confrontation to stand against this American decision,” the executive committee said. “Given its heroic and long-term struggle, the PLO will refuse to kneel down again. The intifada, which is the backbone, will be heightened and intensified, as this seems to be the natural way of struggle against occupation, until the attainment of an independent Palestinian state.”

It was unlikely that the carefully worded reference to an investigation, already alluded to privately by PLO officials in recent weeks, would be sufficient to satisfy the conditions Bush set for a restoration of the dialogue.

The statement, for example, disassociates the PLO from the failed beach raid but still does not, for the present, condemn it.

“The PLO leadership has taken a very clear and responsible position vis - a - vis the beach operation that was used by the American Administration as an excuse to suspend the dialogue with the PLO, and the PLO has . . . disassociated itself from that operation and is not responsible, (nor did) any of its institutions or forces have anything to do with this operation,” the statement said.

“However, the committee also confirms that the Palestine National Council, given that it is the highest source of authority that can investigate and the highest form of authority for the executive committee” will investigate the incident, the committee said. The statement goes on to say that “in this respect, the PLO reaffirmed its commitment to . . . renounce terrorism, all forms of terrorism.”

Israeli forces intercepted 16 guerrillas sent by the Palestine Liberation Front, a hard-line faction of the PLO, stopping some in their speedboats before they reached shore and killing or capturing all of them. Israeli authorities said the attackers had targeted the U.S. Embassy and civilians in the large hotels near the beaches.

Bush, announcing the suspension, cited the PLO’s failure to condemn the raid beyond a vague statement denouncing attacks against civilians. He said the dialogue would not be restored until the PLO took “the necessary steps,” including condemning the operation, disassociating the organization from it and beginning to take steps against front leader Mohammed Abbas, also known as Abul Abbas, a member of the PLO Executive Committee.

The new communique from the Executive Committee on Thursday night criticized the United States for bowing to Israeli pressure to break off the dialogue while allegedly ignoring “atrocities” committed by the Israelis against Palestinians in the Israeli-occupied West Bank and Gaza Strip.

“It is unfortunate to see that a superpower like the United States, which is supposed to bear international responsibility for peace and security and stability, is taking such a decision. The PLO is a central party to the Middle East conflict and thus an essential partner to the peace process,” the committee said.

“Though this incident . . . was not targeted against civilians and not even a single civilian was injured, we see that the double standard . . . is practiced by the U.S. Administration,” the statement added. “This decision of President George Bush will really push the Israeli government and its leadership into continuing its program of aggression and its policies of continuous murder against the Palestinian people in the territories.”

In Israel on Thursday, Prime Minister Yitzhak Shamir applauded the U.S. decision.

“Today, after the United States has reached its conclusions, we cannot but welcome it,” he said in a radio interview. “I hope this suspension will not be temporary, but will determine a new chapter in the U.S. attitude toward the Middle East.”

He cautioned that Bush’s apparent willingness to talk to the PLO again if it takes a strong stand against the failed beach raid “raises doubts that perhaps the United States has not reached a clear conclusion that what we are indeed talking about is a terrorist organization that never stopped terrorism for one moment.”

Officials in Cairo who are close to efforts to set up peace negotiations said the suspension was designed not to deal the PLO out of the peace process, but to pressure PLO Chairman Yasser Arafat into taking tighter control of the occasionally wayward organization.

“The U.S. has to know that they (the PLO) are speaking with one voice, that they’re selling one company,” said one source.

But Arab diplomats predicted that Arafat, under pressure from radicals opposed to the peace negotiations, would be hard-pressed to make any additional concessions to the United States.

“Arafat is being squeezed so hard he can’t give any more,” said one Egyptian official.

Egyptian President Hosni Mubarak, who has attempted to broker direct talks between Israelis and Palestinians in Cairo over the subject of elections in the occupied territories, issued a relatively mild expression of “regret” at the suspension of the U.S. dialogue, an indication, some Western diplomats speculated, that Arab states may not be willing to fall in line behind any PLO demands for radical Arab resistance.

On Wednesday, PLO information department spokesman Jamil Hilal had called on Arab states to impose economic and diplomatic sanctions against the United States.

“Egypt sees that, regardless of various evaluations of the PLO’s stance, certain circumstances and the increasing rigidity of Israel’s position have resulted in the freezing of the peace efforts,” the Egyptians said. They urged a speedy resumption of the dialogue “to maintain the interests of all the people of the area in progressing toward peace and stability and halting violence, tension and suffering.”

Privately, one Egyptian official close to the peace negotiations expressed hope that Arafat would eventually move to condemn the May 30 raid.

“Basically, the Palestinians should have the nerve and the guts not to be provoked by this,” he said. “In this case, a further compromise by the PLO should not be considered a result of pressure, but rather a result of keeping the good work going.”

Times staff writer Daniel Williams, in Jerusalem, contributed to this report.