Bush Lauds Efforts to Free Hostages : Diplomacy: He voices hope that a ‘new flexibility’ will result in early release.

President Bush reaffirmed the United States’ longstanding refusal to negotiate with kidnapers Thursday but praised the U.N. secretary general and the Israeli government for doing just that, expressing hope that a new “flexibility on all sides” will result in the early release of hostages.

Talking to reporters before teeing off for an early morning round of golf at his vacation home in Kennebunkport, Me., Bush said the personal participation of Secretary General Javier Perez de Cuellar is encouraging because U.N. prestige is very high in the aftermath of the Persian Gulf War.

“I think the ball is largely in the constructive hands of Perez de Cuellar and his team now,” Bush said.

On Thursday, Perez de Cuellar left Geneva, where he had spent four days trying to cobble together a prisoner exchange, and drove to Lucerne, Switzerland, for a brief vacation. But he said his effort to swap Arab prisoners held in Israeli jails for Western hostages held by Muslim fundamentalists in Lebanon and Israeli prisoners of war will resume shortly.

“For me, this question has real priority. I am really hopeful that we can reach an agreement,” Perez de Cuellar said.

“Now we have a very clear idea what the Israelis want, what the Western countries want, what the captors want,” he explained. “Then I think with this in hand, it is very easy to negotiate.”

Asked how long he expects the negotiations to continue, the secretary general said: “I don’t know. Perhaps days or weeks. . . . It depends on how quickly I have reaction from both sides.”

Uri Lubrani, Israel’s chief negotiator on the hostage issue, also left Geneva, flying home for more consultations with Prime Minister Yitzhak Shamir’s government. Reuters news service quoted him as saying: “It might be a long process. It’s certainly a complex one. We hope for the best.”

In other developments:

* Two influential Shiite Muslim leaders in Lebanon weighed in on opposite sides of the hostage debate. One, Sheik Mohammed Mehdi Shamsheddine, urged conciliatory steps. The other, Sheik Ahmed Taleb, called on Lebanese kidnapers to hold their hostages until Israel frees an abducted Shiite leader, Sheik Abdel Karim Obeid.

Shamsheddine, considered Lebanon’s highest-ranking Shiite religious leader, called for militia factions to provide a full accounting of the fate of seven missing Israeli soldiers, a step that could clear the way for a massive hostage swap. But Taleb, the successor to Obeid as spiritual leader of the radical Hezbollah organization, said there should be no release of Westerners until Obeid is free.

* Peggy Say, the sister of American hostage Terry A. Anderson, arrived in London for a meeting with Briton John McCarthy, who was released last week after more than five years as a captive in Lebanon. McCarthy was held for a time with Anderson, chief Middle East correspondent of the Associated Press and the longest-held of the Western hostages in Lebanon.

* The brother of British hostage Terry Waite called on the kidnaped Church of England envoy to “keep the faith.” David Waite sent a message of hope to his brother on the British Broadcasting Corp. World Service after receiving information that hostages are being allowed, for the first time, to listen to foreign shortwave broadcasts.

In four days of intensive diplomacy, Perez de Cuellar conferred in person and by telephone with representatives of as many groups involved in the hostage drama as he could.

His objective has been to arrange a deal in which Israel would release 375 Palestinian and Lebanese Shiite prisoners in exchange for the 10 remaining Western hostages and the seven Israeli soldiers. Israel has said that it will release a few of the Arab prisoners in a gesture of goodwill if it receives definitive information indicating whether the Israeli soldiers are alive or dead.

The negotiations seem to be in stark contrast to the “no-deals” policy that the United States has pursued throughout the hostage crisis. The policy, first enunciated during the Ronald Reagan Administration, is based on the theory that if kidnapers obtain anything of value in exchange for the release of hostages, the action will only lead to more kidnapings. U.S. officials have often said Washington does not make deals and does not urge others to do so.

Bush insisted that the U.S. policy is unchanged despite his support for the activities of Perez de Cuellar and the Israeli negotiators.

Asked if he is concerned that the U.N.-backed negotiations might dilute the U.S. policy, Bush said: “I don’t think if it’s being handled this way, there’s any chance of that at all. Our position is well known.”

However, Bush said Israel traditionally has followed a policy of exchanging prisoners with its Arab antagonists.

Did he have a problem with this? the President was asked.

“None at all,” he replied. “I don’t see that there’s anything that would diminish our policy at all in all of this. In fact, I’m just hopeful that it will result in the release of our people.”

In Jerusalem, Lubrani, the Israeli negotiator, said his government has long been willing to swap Arab prisoners for missing Israeli servicemen. But he said the Arabs had not previously expressed much interest.

“But what happened is that the other side, the side which holds the captives and missing, decided the time had come to remove this disgrace,” he told Israel Army Radio.

Kempster reported from Washington and Gerstenzang from Kennebunkport.