Mideast Peace Is Possible--Shamir : Diplomacy: He praises U. S. role in Madrid talks. Arab-Americans stage peaceful protest.

Israeli Prime Minister Yitzhak Shamir, ending a four-day visit to Los Angeles, said Monday that a “slight crack in the gateway to peace” has opened in the Middle East and that he plans to discuss with President Bush the issue of bilateral peace negotiations with Israel’s Arab neighbors.

Shamir, who is scheduled to meet with Bush and Secretary of State James A. Baker III this week in Washington, told a gathering of the Los Angeles World Affairs Council that the recent Madrid peace conference was made possible only through “the active role of the United States as facilitator.”

“We are grateful for the basic understanding of our friends in the United States and look forward to working together hand in hand for peace, for goodwill, for coexistence in our region,” he said.

Earlier, during a meeting with The Times editorial board, Shamir said he hoped to know by the end of his 10-day U. S. visit where the proposed bilateral negotiations would take place. Shamir has insisted that the talks be held in or near the Middle East, but he did not say if he will propose a location during talks with Bush and Baker.

“For the moment it all comes down to the Americans--to the United States, and everyone expresses his position before the Administration here,” he said.

About two dozen Palestinians and other Arab-Americans opposed to Shamir’s policies staged a peaceful demonstration outside the Regent Beverly Wilshire Hotel in Beverly Hills, where Shamir addressed the World Affairs Council.

Inside, Shamir criticized Arab nations for waging a “war of words” against Israel and pledged to oppose any proposal for a new Palestinian state. Outside, protesters denounced Shamir as an obstacle to peace and called for an independent Palestinian state on Israeli-occupied territory.

“As long as Yitzhak Shamir is in power, Israel is not going to be sincere in negotiating peace,” said Samir Twair, a native of Syria. “I think the majority of Israelis are ready, but he is not ready. There has to be a new Israeli government to deal with the peace issue.”

Bas and Mana Shaw, Palestinians who two years ago moved to West Los Angeles from Arab East Jerusalem, said they were angered by Shamir’s statements over the weekend that the status of Jerusalem--which the Israelis claim as the united capital of Israel--was not open to negotiation.

“It is not his capital, it is our capital,” said Bas Shaw, waving a large Palestinian flag at passing motorists, many of whom honked in approval. “If it is kept as a united city, it must be our capital.”

Shamir’s last day in Los Angeles included private meetings with Gov. Pete Wilson and former Secretary of State George P. Shultz, as well as an address at a business symposium on attracting American investment in Israel.

Shamir’s visit will include stops in Boston, New York and Baltimore. Although Shamir will meet with Bush on the peace talks, he said the primary purpose of his trip is to encourage economic ties between the two countries.