Israel Rejects Bush’s Call to Trade Land for Peace : Mideast: The rightist government is determined to keep control of occupied territory.

Israel’s rightist government Thursday rejected President Bush’s call for a solution to the Israeli-Palestinian conflict that includes trading occupied land for peace with Israel’s Arab neighbors.

Prime Minister Yitzhak Shamir heads a coalition committed to keeping the West Bank and Gaza Strip in Israeli hands. Secretary of State James A. Baker III, who once advised Israel to give up its “unrealistic vision” of holding onto the territories, arrives here Monday for his first visit to the Jewish state.

In restrained but firm tones, Israeli officials made it clear that a “new world order” envisioned by Bush is not welcome if it includes the surrender of the occupied land.

“We have some problem with the very concept that in order to make progress must mean territorial concessions,” Avi Pazner, the prime minister’s spokesman, said. “Maybe there are other ways.”

Pazner played down Bush’s remarks, saying that he sees nothing new in them and that Washington and Israel have disagreed over the issue for 23 years, ever since Israel occupied the territories in the 1967 Middle East War.

Foreign Minister David Levy was more direct in describing the Israelis’ view of Bush’s remarks: “We disagree on this issue,” he said flatly.

Bush, speaking Wednesday night to a joint session of Congress, called for settlement of the Israeli-Palestinian conflict based on U.N. resolutions passed after the 1967 conflict and “the principle of territory for peace.”

“This principle must be elaborated to provide for Israel’s security and recognition and at the same time for legitimate Palestinian political rights.” The statement was part of a wide-ranging speech in which Bush outlined foreign and domestic policy goals to follow the Gulf War. Bush has pledged to work for a “new world order” based on collective security and the resolution of outstanding disputes.

The U.N resolutions passed in 1967 called for Israel’s pullout from land taken from Jordan, Egypt and Syria as well as the fixing of secure borders for all states in the region, including Israel.

Israel gave the captured Sinai Peninsula back to Egypt as part of a peace accord signed with Egypt in 1979 but has annexed the Golan Heights, which it seized from Syria during the 1967 war.

Israel has stopped short of annexing the Gaza Strip and the West Bank, together home to 1.7 million Palestinians. Before 1967, Gaza was under Egyptian control and the West Bank belonged to Jordan. In 1988, Jordan gave up its claim to the West Bank in favor of the Palestinians.

Shamir’s government, supported by pro-annexation parties, has been trying to focus peace efforts on talks with hostile Arab states. In his government’s view, the Palestinian issue is only a small part of overall Arab hostility. Shamir claims the West Bank and Gaza by both historical right and security necessity.

Baker, who embarked on a Middle East tour Thursday, is expected to push for a peace plan that encompasses relations between Israel and its Arab neighbors and the Palestinian quest for a homeland. Israeli officials are uneasy about the Palestinian part of the two-track program.

The Shamir government has indicated its intention to revive a plan for Palestinian elections as a step toward granting the Arabs’ limited self-rule in the occupied territories.

The proposal, first offered in May, 1989, stalled because of disputes over who would represent the Palestinians at preliminary talks and whether an eventual Palestinian homeland would be on the agenda. Israel rejects any participation in talks by the Palestine Liberation Organization because of the PLO’s use of terrorist tactics and because of its unrelenting campaign for a homeland.

Numerous other plans have been floated by opposition groups across the Israeli political spectrum. The Labor Party, the largest opposition body, generally embraces the surrender of at least some of the occupied territories in return for peace. Dovish Laborite Gad Yaacobi outlined a plan that would have Israel negotiating with Saudi Arabia and Jordan in parallel with Palestinians in separate negotiations.

Right-wing members of Shamir’s Likud coalition oppose all such proposals.

Geula Cohen, a member of the Tehiya Party, dismissed Bush’s speech as one of a series of stillborn U.S. peace proposals that had surfaced during the last two decades.

Palestinians reacted cautiously to Bush’s speech. Moderate Palestinian spokesman Faisal Husseini, a pro-PLO nationalist, said there were “positive points” in the speech.