PLO Ally May Join Peace Talks as Chief Palestinian Delegate : Mideast: In policy shift, Israeli minister says he would not object to Faisal Husseini’s participation.

Foreign Minister Shimon Peres, signaling a major shift in Israel’s approach to negotiations with the Palestinians on self-government, said Friday that he would not object to a prominent Palestinian politician closely allied with the Palestine Liberation Organization as the chief Palestinian delegate.

Asked about a U.S. proposal that Faisal Husseini, the overall leader of the Palestinian negotiators, become an active participant in the Arab-Israeli talks, Peres told Israel army radio: “I never ruled out Faisal Husseini. . . . In practice, Faisal Husseini already heads the Palestinian team.”

Husseini, in Tunisia for meetings with PLO Chairman Yasser Arafat, confirmed that the United States is proposing, as one element in a broad package of suggestions aimed at reviving the Arab-Israeli peace talks, that he personally lead the Palestinian delegation at the next meeting with the Israelis.

“It is still informal and, I would say, unofficial, but we will be going to Washington next week to clarify this and many other issues,” Husseini said. “Then we will make our decision on whether to take part in the next round of talks and on what terms.”

Although Peres was attempting in his remarks to bolster the Clinton Administration’s efforts to revive the negotiations, broken off after Israel’s deportation of 415 suspected Islamic militants last December, his acceptance of Husseini as the chief Palestinian delegate had far-reaching implications:

* The formula under which Israel and the Arabs began their negotiations in Madrid 17 months ago will be substantially altered if Husseini is included. Israel is not only dropping its objection to residents of Arab East Jerusalem being in the Palestinian delegation, but is no longer claiming the right to approve its members. Further changes might now be made in the “Madrid formula.”

* The future of Jerusalem, perhaps the most difficult issue that Israeli and Palestinian negotiators will have to confront as they work out arrangements for Palestinian autonomy, is implicitly open for discussion--although Israeli officials have repeatedly declared it non-negotiable.

* And Israel is taking a further step toward negotiating directly with the PLO on Palestinian autonomy. The patrician Husseini, 52, has not hidden his early membership in Fatah, the mainstream PLO group headed by Arafat, and he has acted with increasing openness as the PLO’s resident viceroy.

Sari Nusseibeh, Husseini’s deputy as chief of the overall negotiating team, said his formal inclusion would constitute “a breakthrough from the Palestinian point of view” and would bring a real upgrading of the talks.

Immediate objections came from Israel’s right-wing opposition. Leaders of the Likud Party warned that Husseini’s inclusion would, indeed, open the future of Jerusalem to negotiation and bring the PLO even deeper into the talks; they urged adherence to the Madrid formula for the negotiations.

Although nominated as head of the Palestinian negotiating team at the outset of the talks in October, 1991, Husseini was excluded at Israel’s insistence from the delegation to Madrid and subsequent rounds.

Yitzhak Shamir, then prime minister, had declared that Israel would not meet with Palestinians from East Jerusalem or in exile abroad, arguing that only autonomy for the West Bank and the Gaza Strip would be discussed.

Including delegates from East Jerusalem would open the question of the city’s future, Shamir contended, and Israel had already proclaimed a unified Jerusalem as its “eternal capital.” Including Palestinians from abroad, he said, would bring up their claim of “a right of return” to homes not only in the occupied territories but in Israel itself.

Pressed by former Secretary of State James A. Baker III, the Palestinians and the other Arabs--Syria, Jordan and Lebanon--in the direct, bilateral negotiations with Israel accepted Shamir’s terms in order to get the negotiations under way.

In November, Israel agreed, albeit with a bit of fuss, to the participation of a Palestinian from outside the occupied territories at a multilateral discussion in Ottawa of refugee problems. At Egypt’s urging, it also agreed to the participation of Palestinian exiles at other multilateral negotiations.

On Friday, Peres made light of Shamir’s prohibition on East Jerusalem residents. “Americans living in Paris vote in U.S. elections, but that doesn’t make Paris an American city,” he told Israel army radio, dismissing Israel’s previous objection to Husseini and others as “nonsensical.”

“No doubt, there is a suggestion like that in the air,” Peres said of the U.S. proposal. “First of all, however, we should return to the negotiations, and then we will see if (Husseini’s inclusion) is demanded in order to further the negotiations. . . .

“The Americans are already speaking with him, and we are not deaf or blind,” he added.

Prime Minister Yitzhak Rabin, although questioned directly about Husseini’s inclusion during a parliamentary debate Thursday, has said nothing, adhering to his position that the Palestinians must agree to return to the Washington talks, scheduled for April 20, before Israel makes any concessions.

But state-run Israel Television reported Friday evening that “political circles in Israel assumed the government would agree” to Husseini’s inclusion in the Palestinian negotiating team--provided the Palestinians first announce that they will go back to the talks.

Husseini, ironically, would probably participate only in an initial few meetings of the two delegations, according to Palestinian sources, and then return the day-to-day chairmanship to Dr. Haidar Abdul-Shafi, the Gaza physician who led the Palestinians to Madrid and seven subsequent rounds.

Husseini’s inclusion in the talks had been expected since late last year when he met with then-President George Bush at the White House. He recently met with Peres in Jerusalem to discuss ways to revive the peace talks, according to Israeli sources.