NEWS ANALYSIS : Now, It’s Israel’s Turn to Question U.S. Role as an ‘Honest Broker’ : Mideast: Complaints over Bush’s peace talk stance are now emanating from Jerusalem, not Arab capitals.

America can’t be trusted. The United States plays favorites. Washington is not a reliable mediator.

These were the kind of complaints once heard throughout the Arab world whenever it was suggested that the way to peace in the Middle East passes through the United States.

But last week, this litany of hard feelings flowed not from Arab lips, but Israel’s. America’s closest ally in the Middle East was suddenly playing the role of wounded party, one subject to superpower bullying.

The specific cause of the pain were the double-barrel warnings from President Bush and Secretary of State James A. Baker III that new foreign aid to Israel may depend on steps to peace and an end to Israeli settlement of the disputed West Bank and Gaza Strip. Bush has vowed to delay guarantees that would make it easier for Israel to borrow $10 billion to house and provide jobs for new Soviet immigrants.

The salvoes appeared to have caught leaders of Israel’s right-wing government off guard; Prime Minister Yitzhak Shamir essentially pleaded for someone to wake him when it’s over. “I hope this will pass like a bad dream,” he said.

Underlying the emotional eruptions were perceptions of sudden change of tactics by the United States and perhaps a tidal change in the role of Washington in the region.

The United States is no longer acting as Israel’s sole champion in a hostile world. With the Soviet Union’s traditional support for the Arabs now worthless currency and the Arabs competing with Israel for the title of America’s best friend, the United States is behaving as a detached mediator with no particular leaning to either side of the conflict. Or perhaps, trying to do the impossible: lean to all sides.

The tactical change alone was jarring. For six months, Secretary Baker had tried to steer clear of issues of substance dividing the warring parties in the Middle East, figuring that it was most important to get everyone to the negotiating table even if no one exactly knew the precise goals of the talks. The key, as explained by aides of Baker was to get everyone into a room, where just by being there, they would undergo a “mind-altering experience” that would lead to breakthrough on the region’s intractable problems.

But the closer the conference gets, the more the Bush Administration finds itself doing exactly what it said it wouldn’t: arguing with the Arabs and Israelis about the most fundamental and sensitive issues in the 43-year-old conflict.

Israel, for instance, was expecting to come to the table saying that it was set against a withdrawal from land won from Arab neighbors, in return for peace treaties. Syria and the rest of the Arabs, on the other hand, were coming armed with U.N. resolutions which call for Israel to withdraw from at least some territories.

Fine with Baker, as long as everyone showed up.

But by focusing on settlements, Bush and Baker tossed a matter of substance--perhaps THE matter--into plain view. Occupied territory is up for negotiation. In Israel, the immediate reaction was something that Baker had long hoped to avoid: Israel’s participation was put into question.

Health Minister Ehud Olmert, a confidant of Shamir’s, said Baker had created “a situation that requires us to give further consideration regarding our stance.”

Transport Minister Moshe Katzav said U.S. positions had all but obliterated Washington’s status as mediator. “Based on statements in the media relating to the secretary of state, in my opinion this status, this position of the honest broker no longer exists,” he said.

Curiously, the Palestinians, who would directly benefit from a settlement freeze, seemed barely to recognize the cards they were dealt. “Suspicions about the outcome of the conference are building up,” said a senior official of the Palestine Liberation Organization in Jordan.

Apparently, not trusting their own ability to make gains at the talks, the Palestinian leaders asked for more assurances: that the negotiations will seek Israeli withdrawal from most of the West Bank and Gaza Strip, will discuss the status of Israeli-controlled Arab districts of East Jerusalem, and may lead to a Palestinian state, perhaps in a confederation with Jordan.

Otherwise, the Palestinians, too, might stay away. “We need a signal from the United States that shows us that the peace conference will go in the right direction. We want to get on Mr. Baker’s bus, but we need a lift up into it,” the PLO official added.

Baker’s willingness to give the warring parties “letters of assurance” which spell out American positions undermined the effort by Baker to keep divisive issues at bay. In a distant echo of Woodrow Wilson’s principle of “open covenants, openly arrived at,” Baker said that every party to the talks will be given a copy of all the assurances. “Once those assurance letters have been agreed to . . . then we intend to furnish them to everyone. There will be no secrets,” he told the reporters traveling with him on his latest diplomatic odyssey.

A problem with this approach is that whenever Baker announces policy in one capital--for example, his declaration in Damascus that the United States still refuses to recognize Israel’s annexation of the Golan Heights--it causes heartburn in another.

American officials admit to severe hardships in trying to reconcile conflicting goals. “But we’re not going to do this in a way that either undercuts our policy, our position,” said an aide to Baker. “Or is inconsistent in terms of what we’re saying to one side or another.”

Which raises the issue of exactly what role the United States plans to play in the proposed talks. Jimmy Carter was a cajoler, arm-twister and international insurance agent during the Camp David peace talks between Egypt and Israel. But Egypt’s Anwar Sadat and Israel’s Menachem Begin were willing to permit him those functions.

Many Arab suspicions linger, although these may be breaking down. But in the meantime, Israeli mistrust is growing. In the wake of the loan-guarantee flap, Shamir was moved to appeal to Washington to be “objective.”

It is becoming clear that in the post-Cold War world, the American diplomatic role is undergoing a rapid transformation in the Middle East as well as in Europe and elsewhere. During the Reagan presidency, the world was divided between clients of the United States and clients of the Soviet Union. Us against Them. Israel was for Us. The Arabs, mostly, for Them.

But an imploding Soviet Union has slipped below the horizon. Bush is in a position of sole superpower leader. In a way, almost everyone has become a client of the United States and rather than coach one team, Bush is trying to play referee.

Suddenly, political principles that took second place to Cold War preoccupations have gained strength. For example, the Reagan Administration, which took a dim view of the Israeli settlement program, did nothing to stop it. Bush, with the threat of withholding aid, is putting teeth into an old policy.

“I think the President will be willing to go to the American people on this,” said a senior official who was later identified as Baker himself.

“It’s their tax dollars that would be supporting settlement activity which we used to characterize as illegal and which we now moderately,” he added with irony, “characterize as an obstacle to peace.”

Israel views this refereeing process as an alienation of U.S. support. Some Israeli officials seem to believe that the United States has no policy at all, only mouthings of Arab positions. “The United States cannot, before the start of talks between Israel and Arab states, accept Arab positions which are subject to negotiations,” said Transport Minister Katzav.

Of course, the Arabs frequently complain that Washington follows Israel’s lead--and these beliefs are only now being thrown into doubt, if only slowly.

“Mr. Bush did prove to us that he can do a miracle for peace by freezing the $10 billion (loan guarantee),” said a PLO leader in Jordan, who nonetheless asked that Baker do more.

The referee’s role cannot be finally tested until the talks get under way, and there are still plenty of traps along the way.

First and foremost, perhaps, is the increasingly visible role being played by the PLO, in direct contradiction of Israeli wishes to bar the group.

PLO leaders meet Monday in Algiers to consider taking part in the peace talks. Already, they have, indirectly and through a diplomatic sleight of hand tolerated by the United States, taken part.

The quick trip to Jordan on Friday of Hanan Ashrawi, a Palestinian who has met with Baker on at least half a dozen occasions, was a case in point.

Ashrawi received a late-night fax message from PLO chief Yasser Arafat telling her to go to Amman and meet with Baker. The fax said that the meeting, which at first had been rejected, would help the PLO decide about the peace conference.

Ashrawi called Molly Williamson, the U.S. consul general in Jerusalem, for a ride to the Israel-Jordan border and for help in getting the Israelis to open the bridge across the Jordan River for her before its normal 8 a.m. starting time.

Williamson did the driving and the Israelis opened the bridge.

In Jordan, Baker tried to protect the fiction of PLO noninvolvement by barring reporters from asking Ashrawi questions in his presence. The ostensible reason was to protect Ashrawi’s safety, an explanation that seemed absurd since the Palestinian conducted press conferences before and after her meeting.

But the ban on questioning saved Baker from the embarrassment--and the negative impact in Israel--of having Ashrawi speak about her PLO credentials, as she always does when someone asks here whom she represents.

In any case, it’s not clear how long the Israelis will uphold the fading fig leaf. With members of Shamir’s government already wavering in their backing for talks, the PLO presence could serve as a convenient excuse to pull out.