Shamir Agrees to Peace Talks--but With Key Proviso : Diplomacy: Bush hails the decision. The Israelis insist on restricting Palestinian representatives, and Baker begins quest for delegates acceptable to Jerusalem.

Israeli Prime Minister Yitzhak Shamir announced Thursday that he has formally agreed to the Bush Administration’s proposal for an Arab-Israeli peace conference, but he advised that Israel will still insist on restricting who can represent the Palestinians at the talks.

Even with that key condition, the Israeli decision was a long-awaited boost for the U.S. plan, which has now been accepted by every major participant except the Palestinians themselves. American officials said Secretary of State James A. Baker III, after weeks of focusing on bringing Israel to the table, was launching a diplomatic campaign to press Palestinian leaders to join the conference on terms that Shamir will accept.

The peace conference, as proposed by President Bush, would convene this October as a prelude to detailed one-on-one talks between Israel and its Arab neighbors, as well as between Israel and the Palestinians, in search of regional peace agreements.

“Since its establishment, Israel has sought peace with its neighbors,” Shamir told reporters outside his office after a 90-minute meeting with Baker. “We have therefore expressed our readiness to enter peace negotiations in accordance with the U.S. proposal, subject to a satisfactory solution of the issue of Palestinian-Arab representation.”

Bush and Baker hailed the Israeli decision, but both warned that more steps lay ahead before the conference could be set.

“That is the ‘yes’ that we were hoping for from the Israelis,” Baker said. “The prospect of Arab-Israeli peace discussions is no longer simply a dream.”

Bush told reporters on Air Force One en route to Washington from his three-day trip to the Soviet Union: “There’s still a lot of hard work ahead. But this is bound to be good news for peace in the Middle East.”

Baker won Shamir’s assent on his sixth visit to Israel since March, a grueling diplomatic campaign that prompted some State Department officials to wonder whether the Israelis could ever be jawboned into peace talks.

But on Thursday, a grinning Baker looked distinctly pleased as a small crowd of Israelis and American tourists applauded him on his return to the King David Hotel.

Later, a senior State Department official expressed satisfaction that Baker had wrangled Israel’s “acceptance of a process that was rejected six or seven weeks ago.”

“You think it was a piece of cake to get them to say yes?” he asked.

Shamir said he will take his agreement to the Israeli Cabinet on Sunday for approval. Right-wing factions within his own Likud Party as well as far-right splinter parties have already expressed concern that Shamir has fallen into a trap. They believe that negotiations will inevitably lead to a surrender of the West Bank, Gaza Strip and Golan Heights, land won by Israel in the 1967 Middle East War.

By agreeing to the U.S. proposal without extracting a precise formula for Palestinian participation in the talks, Shamir acceded to a plea from Baker--and got, in return, a solemn promise that the United States would make sure the ultimate solution of that issue is acceptable to Israel.

“We have worked out certain procedures and assurances and understandings” on that issue, a senior U.S. official said after Baker’s meeting with Shamir. “We have some understandings that I will not go into.”

Nevertheless, the issue of Palestinian participation in the talks, probably as part of a joint delegation with Jordan, remained a large stumbling block. Israel has insisted that no Palestinians from Jerusalem participate, because that might imply that the Israeli annexation of the city’s eastern half is open to negotiation. But most Palestinian leaders have insisted that Jerusalem, historically their largest city and their natural political center, be represented.

In an interview on Israel Television Thursday night, Shamir said, “We have agreements with the representatives of the United States on the Palestinian composition of this delegation--that it will not include PLO members; that it will not include people from East Jerusalem; that it will not include people from outside Israel. Apparently, the Americans have not reached an agreement with the other side (the Palestinians).”

By putting off resolution of the issue to a later stage, Bush and Baker appeared to be putting to the test their faith in the momentum of the negotiating process--hoping that the closer a peace conference comes, the more difficult it will be for either side to pull out.

Several proposals for papering over the differences between Israelis and Palestinians have been floated here in the past few days. One contemplates the presence of a Jerusalem-born Jordanian as part of the joint delegation. Another would postpone the presence of a Jerusalemite until later, when the talks actually reach the issue of Jerusalem. Part of the Bush tactic is to put off the most intractable issues until last.

A senior U.S. official refused to say what substantive assurances the United States has offered Israel, saying only: “There is an understanding between us with respect to the nature of the assurances. . . . We have had long conversations between us on what we will and will not be willing to say.”

Shamir’s acceptance of the U.S. plan came after weeks of concentrated American pressure designed to make Israel worry about looking like the main obstacle to peace.

The last straw in the American campaign, U.S. officials said, was the unusual joint declaration in Moscow by Bush and Soviet President Mikhail S. Gorbachev on Wednesday, declaring that the two superpowers wanted a peace conference in October.

Baker spoke with Shamir by telephone for 45 minutes shortly before the two presidents’ declaration and told him bluntly that “it was very important for us to be able to go out and say, ‘Israel says yes to peace,’ ” a senior official recounted.

Asked whether the United States believed that Shamir was sincere about wanting peace, a senior official pointedly refused to answer the question, saying only: “This is an opportunity that they’ve said they’ve wanted for 40 years.”

An Israeli government spokesman suggested that part of Shamir’s motive was tactical. By giving his qualified “yes,” Shamir has been able to buy some time, the spokesman said. “There are still two months left for discussions,” he noted.

Israeli officials were quick to toss the ball to the Palestinians who are expected to meet with Baker this morning. “The problem is not between us and the Americans. It’s between the Americans and the Palestinians,” said a government spokesman.

There was some question whether Palestinians will be able to provide a “final answer” to the American plan by today. U.S. officials said Thursday evening that they were not sure that Baker’s meeting with the Palestinians would come off, but Palestinian spokesmen insisted that a delegation would keep its appointment.

Three Palestinian leaders--Faisal Husseini from Jerusalem, Hanan Ashrawi from the West Bank and Zacharia Agha from the Gaza Strip--are expected to bring to the meeting a document outlining their position, a Palestinian source said.

The source described the document as a “yes,” but with conditions attached. Primary is a call for a Jerusalem delegate to attend the conference. In addition, the statement makes reference to U.N. resolutions that call for Israel to return Arab land it won in the 1967 war. In the Palestinians’ eyes, that includes not only the West Bank and Gaza, but also Arab neighborhoods of East Jerusalem.

The Palestinians are also demanding “self-determination,” their formal term for independent statehood.

“We cannot let Palestinian rights be nullified,” said Ashrawi, an educator at Birzeit University, a West Bank institution that was closed by the Israeli army from the beginning of the Arab uprising.

Ashrawi would not confirm the contents of the document but said, “All along, we have been giving a qualified ‘yes.’ ”

On Wednesday, on the eve of Baker’s visit, about 40 representatives of various PLO factions met in East Jerusalem to hammer out a common position. The majority objected to meeting Baker at all, said a participant.

However, the activist added, the PLO had authorized the three delegates to go despite the rancor. “What we have here is an acquiescent PLO outside and an extreme community inside,” he said.

Baker will soon inform Syria, Egypt and other parties in the talks of his “understandings” with Shamir, U.S. officials said.

“Right now, the only people who haven’t said ‘yes’ to the process and the proposal are the Palestinians,” a senior American official concluded.

Asked about a reported Egyptian offer to attend the peace conference even if the Palestinians refused, the official pointedly suggested that the United States would be willing to pursue that approach if necessary.

“What we’ve talked about here is a two-track process (including the Palestinians in one of the two tracks), but I’m not going to give you a yes or no on that, because that really is a decision primarily for other governments to make,” he said.

“We would like to see any parties with influence on the Palestinians to make the point to the Palestinians that they have an opportunity,” he said.

“Where would they be if they had seized the opportunity presented by Camp David?” he asked, referring to the peace talks organized by President Jimmy Carter in 1978.

He said Baker planned to “make that case to anyone who has influence on the Palestinians,” including the Soviet Union, Egypt, Algeria, Tunisia and Morocco.

Baker is scheduled to visit Morocco, Algeria and Tunisia over the weekend and will be talking with Morocco’s King Hassan II only two days after the monarch met with Palestine Liberation Organization chief Yasser Arafat.

Baker will not meet directly with any officials of the PLO, however, his spokeswoman said.

“I can tell you categorically that there has never been any consideration given . . . to any meeting with the PLO,” spokeswoman Margaret Tutwiler said.

Despite Baker’s accomplishment, a fundamental question remained unanswered: With the two sides still far apart on matters of substance, could the Administration succeed in arranging a peace conference--only to watch it break down immediately in intractable disputes?

On the central question of how to achieve peace, for example, all the Arabs agree that Israel must give up some of the territories it conquered in 1967 in exchange for reconciliation; Shamir insists that he will never give up land for peace.

“There is certainly that concern,” said William B. Quandt, a former U.S. Middle East negotiator now at Washington’s Brookings Institution. “But that doesn’t diminish what the Administration has done. And the only way to make progress on the substantive issues is to get the two sides talking about them.”

Where the Arab States Stand

Which Arab states are willing to attend peace talks with Israel? The major countries say they back U.N. Security Council Resolution 242’s call for the return of territories and the right of all states to live in peace.

Egypt. Would attend peace conference. The most populous Arab state regained the Sinai Peninsula, lost in the 1967 war, through a 1979 peace treaty with Israel. The Camp David accords also called for future negotiations among Egypt, Jordan, Israel and the Palestinians. Egypt committed itself to the peace conference and worked to persuade other Arab nations to attend.

Palestinians. Would attend, but who? The Palestine Liberation Organization is accepted as the representative of the world’s 5 million Palestinians. But Israel refuses to talk to the PLO, citing its support for terrorism, which the PLO has renounced.

Jordan. Would attend. With over half its 3-million population Palestinian, Jordan wants to see them achieve self-determination, which might result in a confederation.

Lebanon. Would attend. Its acceptance is basically dictated by neighboring Syria, which has 40,000 troops in the country. Lebanon wants Israel out of its southern border zone.

Saudi Arabia. Would attend as an observer. It has said talks are the responsibility of the front-line states, but as an Arab bankroller, its support is crucial.

Syria. Would attend. Its main goal is return of the Golan Heights, but it also has a sizable Palestinian refugee population. President Hafez Assad was persuaded to attend by the loss of Soviet support and U.S. promises to push for Israeli withdrawal from unspecified occupied lands.

Iraq. Would not attend. President Saddam Hussein claimed, among other reasons, that he occupied neighboring Kuwait to force Israel to relinquish the West Bank and Gaza Strip. Hussein has called his longtime enemy, Syrian President Assad, a traitor for agreeing to talks with Israel.