Face-Saving U.S.-Israel Formula Sought : Diplomacy: Despite peacemaking attempts, Shamir and Baker remain firmly at odds over a U.N. investigation.

Diplomats and dignitaries searched Tuesday for a face-saving formula to head off a new U.S.-Israel confrontation, but Prime Minister Yitzhak Shamir’s government and Secretary of State James A. Baker III held their ground in the festering dispute over the killing of 21 Palestinian demonstrators.

Israeli Foreign Minister David Levy said the United States and the rest of the U.N. Security Council acted on the basis of a “predetermined charge sheet” when they voted to send investigators to Jerusalem to investigate last week’s Temple Mount slayings. The Israeli Cabinet voted Sunday to refuse to cooperate.

Speaking at a Washington news conference, Baker complained that the Shamir government’s attitude “moves Israel and moves our effort in the (Persian) Gulf in the wrong direction.”

Also, he said, the United States believes that Israeli police used excessive force against the Palestinian demonstrators, justifying a U.N. investigation regardless of the effect of the incident on the U.S.-led coalition against Iraq.

He rejected “the suggestion that somehow we are voting to condemn the . . . killing of (21) people and the wounding of some 150 through live fire simply because we want to maintain the coalition in the gulf.”

Despite the unyielding stance of the U.S. and Israeli governments, volunteer peacemakers ranging from the mayor of Jerusalem to the foreign secretary of Britain suggested compromises. At the United Nations, diplomats huddled in small groups looking for a way out of the impasse.

Teddy Kollek, Jerusalem’s mayor, offered to explain Israel’s side of the controversy to the U.N. investigating team if it comes to his city.

“I will meet anyone who asks to meet with me,” Kollek said.

British Foreign Secretary Douglas Hurd, in Jerusalem on an official visit, asked Shamir to consider a dual approach: rejecting the U.N. condemnation but agreeing to receive the investigators.

Seymour Reich, who heads the U.S.-based Conference of Presidents of Major American Jewish Organizations, suggested that Israel might hand over a report of its own investigation of the incident and thus “satisfy the needs of the Security Council.”

But Israeli government spokesmen rejected all of the proposals.

At the United Nations, several possible compromises were being discussed by diplomats. One would allow a mission to be sent after an independent commission in Israel finishes its report on the killings. Another calls for Secretary General Javier Perez de Cuellar to send his own representative--but not a full-fledged mission.

The only window left ajar by the Israeli government seemed to be contained in a remark by Israel’s U.N. ambassador, who said that the U.N. group could visit Israel “as tourists.”

Reich, who has met with Shamir twice in the past two days, said the prime minister is angry. He said there is a “lack of warmth” in Israeli-U.S. relations.

“What’s missing at the moment is trust,” Reich said.

Israel has rejected the U.N. condemnation as one-sided because it focused on the police shootings without placing equal stress on the rock attack on Jewish worshipers that preceded the shootings.

At his news conference, Baker insisted that the resolution was balanced because it “refers to the attacks on innocent worshipers.” However, Baker said he has seen no evidence to implicate the Palestine Liberation Organization in provoking the clash, as Israeli officials have charged.

Perhaps more significantly, the Shamir government claims that the United Nations has no business intervening in the affairs of Jerusalem, the Israeli capital. Baker made it clear that he rejects that argument.

The walled Old City, where the shootings took place, is in the eastern part of Jerusalem, which was under Jordanian control before Israeli troops captured it during the 1967 Arab-Israeli War. The Israeli Parliament voted at once to annex East Jerusalem, but the United Nations and the United States have never officially recognized that action.

At his news conference, Baker reminded reporters that “the Green Line ran through Jerusalem.”

As the question of the mission continued to simmer, Perez de Cuellar met for half an hour at the United Nations with representatives of the PLO.

Nasser Kidwa, the PLO’s alternate permanent observer, said he told the secretary general that although his organization believes the U.N. resolution approved Friday night is “insufficient,” Palestinians in Jerusalem would cooperate fully with the inquiry.

Williams reported from Jerusalem and Kempster from Washington. Staff writer John J. Goldman at the United Nations contributed to this report.