Feuding Kurdish Factions Swallow Pride, Talk Peace : Iraq: Fighting placed Western agencies protecting Kurds from Saddam Hussein in an awkward position.

Feasting away their differences in a gloomy northern Iraq hotel, the leaders of Iraq’s two feuding Kurdish armies embraced and held their first talks Sunday on ending a five-week conflict that has deeply embarrassed the Western forces and aid agencies protecting their enclave from Iraqi President Saddam Hussein.

But first it took a bearhug from a dissident Iraqi general to force a reluctant Masoud Barzani to embrace his rival, Jalal Talabani. The two men, however, agreed to further peace measures and expressed their hopes that fighting among the separatist rebels that has killed up to 400 people is now over.

“Our relationship is stronger than a kiss,” Talabani quipped before standing with his rival at the head of a long table loaded with rice, kebabs, chicken and stews for the feast that traditionally signifies the end of Kurdish blood feuds. “We want to consolidate peace and to restore our alliance and our struggle against dictatorship.”

Both factions in the fight for a separate nation have blamed each other for the infighting, but tensions were clearly aggravated by Talabani’s recent absence abroad. Since his return by a Turkish helicopter Thursday, he has given his blessing to a peace process that has brought a cease-fire and troop withdrawals from front lines. But distrust remains.

“It’s crazy. The two sides are only about as different as Coke and Pepsi-Cola,” said a senior Western relief official, venting his anger at what he called a senseless internal power struggle that had set the Kurdish cause back at a time when Western donors are beginning to discuss next year’s $288-million aid program for Iraq.

Most of that goes to the 3.5 million people of northern Iraq, and much of the money has come out of U.S. military coffers--$65.6 million in the fiscal year 1992, $61 million in 1993 and a planned $139 million in 1994, said Harry Houck, the local representative of the Office of U.S. Foreign Disaster Assistance.

But the fighting has also been of concern to the United States, which is worried that the squabbling might encourage Hussein to attack. American visits to the Kurdish heartlands have also been restricted since a tragic “friendly fire” incident over northern Iraq in April in which U.S. planes shot down two U.S. helicopters, killing all 26 allied officers on board.

So far, the Iraqi president has made no military moves and seems to have been ready to wait for the Kurds to collapse on their own, according to sources in the allied Operation Provide Comfort. The Turkish-based force brought the Iraqi Kurds home after they fled Hussein’s vengeful armies to the mountains of Turkey and Iran after the Gulf War in 1991 and has protected them ever since.

Sunday’s peace talks between the Kurdish rivals have helped mend the damage done in the latest fighting, although the Kurdish area is now badly divided. Talabani’s Patriotic Union of Kurdistan now controls most of the eastern region of Sulaymaniyah, while Barzani’s Kurdistan Democratic Party controls the western region of Dahuk. Both contest parts of central Irbil and three areas close to the Iranian border, where pro-Iranian Islamists have been advancing and the cease-fire has yet to take hold.

Even the talks in central Irbil had tense moments. Just as Talabani’s limousine crunched to a halt outside the Shireen Palace Hotel, a stray shot rang out. Heavily armed guerrillas leaped to battle stations.

Bloodshed was averted by the soldiers of the Iraqi National Congress, the umbrella organization of groups opposed to Hussein. The soldiers’ commander, Capt. Mohammed, a Shiite Muslim from Baghdad, stood among the guerrillas in the middle of the square, waving his arms and shouting that nothing was wrong.

The Kurds may have damaged their reputation with the recent fighting, but the Iraqi National Congress has won credit. The congress’s leader, Ahmed Chalab, did the most to mediate peace between the Kurds. His 750-man force of Iraqi army defectors is now also successfully securing most of the roads between areas controlled by the rival Kurdish groups. Their flag of three interlocking circles, representing the Sunni, Shiite and Kurdish communities of Iraq, has become a common and respected sight.

“I’d never seen it before, this fighting. We didn’t know they had a disciplined army like this. We’re proud of them,” said Ismail Aziz, 31, a Kurdish movie theater employee watching the congress soldiers who handled the guerrillas milling outside the hotel.