‘Egyptian Channel’ Helped Forge Israel-PLO Pact : Mideast: Cairo is now willing to discuss its role in peace process. One reason is that it hopes to mediate between Syria and Israel.

The gilded former pasha’s palace at the edge of the Pyramids stubbornly flew the flag of Palestine throughout the groundbreaking preliminary talks--boycotted by the Palestinians as “Egypt’s treason”--that led to Egypt’s peace treaty with Israel in 1979.

In the years since then, the palaces have changed. Two of the major players--Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin--are dead.

But Egypt in recent days has taken no small comfort in the fact that the road to peace between Israel and the Palestinians passed once again through Egypt.

Though the secret talks in Norway between Israel and the Palestine Liberation Organization have drawn most of the attention, there is growing evidence that an equally secret “Egyptian channel” acted as a sounding board for some of the more controversial aspects of the peace plan. It helped reinforce Israel’s confidence that PLO Chairman Yasser Arafat could be counted on to deliver on the promises his aides were making in Oslo.

At one of his summer palaces in the Suez Canal city of Ismailia, it was Egyptian President Hosni Mubarak who first approached Israeli Prime Minister Yitzhak Rabin with details of Arafat’s proposal to pair Israeli withdrawal in the Gaza Strip with a similar move in the West Bank town of Jericho. Later, Mubarak sent his top political adviser, Osama Baz, to Jerusalem to lobby for the proposal.

And it was Mubarak, at yet another palace in Alexandria, who transmitted the “Gaza-Jericho first” plan to Secretary of State Warren Christopher in Egypt--a document bearing Arafat’s signature, handed over in Egypt a day before Christopher’s trip to Jerusalem to meet with the official Palestinian delegation.

Details of Egypt’s support to the back-channel PLO-Israeli negotiations in Norway were known only to Mubarak and a tight-lipped circle of three advisers.

Equally hushed was a meeting in July in Cairo between one of Arafat’s top advisers, Nabil Shaath, and Israeli Environment Minister Yossi Sarid that was reportedly used as a vehicle for Rabin to assure himself that Arafat was genuine about peace.

Now, as Egypt prepares to launch a similar but more public mediation role between Israel and Syria, officials here are more willing to talk about their role and what it portends for the future.

They say their diplomacy is the hallmark of political legitimacy for Egypt after it suffered more than a decade of isolation within the Arab world for Sadat’s groundbreaking peace agreement with Israel. “I can only say that President Sadat was a visionary who lived 20 years before his time,” Mubarak said. “His ideas were too advanced for his time.”

Egyptian officials say they were first approached by the Palestinians some time after the onset of the back-channel talks in Oslo to act as advisers.

The Israelis were equally eager to have the Egyptians involved because Egypt is an Arab country with which Israel at least has a track record.

“Both of the two parties came back to us to discuss some of the deadlocks or difficulties they were facing,” said an Egyptian Foreign Ministry official. “They believed we could come forward with suggestions or an idea which would help to bail them out of the bottleneck.

“Then we responded. We were involved in terms of phrasing parts of the Declaration (of Principles), putting ideas forward. But we didn’t in any way pressure the PLO. We didn’t force them to make any concessions.”

Sources familiar with the process say the Egyptians helped draft specific language in the agreement when the Palestinians “got a case of nerves.”

The Egyptians also were able to advise the Palestinians, based on their own experience with Camp David, that the Israelis were behaving in a fashion that signaled a genuine intention to make peace. “In a way, they really helped give us a feel of how reasonable the Israelis may be and how reasonably the (Gaza-Jericho first) idea might appeal to them,” said Shaath, the Arafat adviser.

“The Egyptians also played an important role in the official negotiations dealing with the American proposals, attempting all the time to continue the interaction with the American proposals and never to let the ball remain in our court,” Shaath added, citing Egyptian efforts to keep the United States engaged in the process even when the Palestinian delegation was threatening to resign.

Finally, in the three or four crucial days earlier this month after the secret Israeli-PLO talks in Oslo had broken up and before they resumed again in Paris, the Egyptians carried on direct contacts with both Israelis and Palestinians to keep the discussions moving on mutual recognition, Shaath said.

At the same time, Egyptian Foreign Minister Amir Moussa began a 10-day visit to Washington, a visit planned to focus largely on moving the Middle East peace process forward.

For Egypt, the high-profile diplomacy is a question not only of legitimizing the Camp David accords but of political survival as well. Remaining a crucial player in the peace process undoubtedly improves Egypt’s standing in arguing for continued U.S. aid to Egypt, which now stands at $2.3 billion a year but could be threatened by a tightening American budget after 1995.

Also, Egyptian officials see a resolution of the Palestinian problem and an improved economic climate in the Middle East as the most important moves they can take toward combatting their own domestic troubles with Islamic fundamentalism. Islamic violence reached unprecedented levels in Egypt last year, fueled in large part by economic disparity and Arab anger over the long-running Arab-Israeli conflict.

“We’re very interested in mobilizing the economic resources of this area toward development,” said Foreign Ministry spokesman Nagui Ghatrify. “Bringing peace to the Middle East will have its very positive implications on the welfare and status of living of people in this area and, thus, will have its effect on political stability. Which, will, in the end, mean more democratization, more respect for human rights, more respect for the role of the market in the economy, all the issues we share with the West, and particularly the U.S.”