Algerian Official Says Civil War Near End : North Africa: Interior minister hints at compromise with Islamic fundamentalists. U.S. officials are skeptical.

A key Algerian official said in an interview published Sunday that the three-year civil war in his country is near its end and suggested that the government might be prepared to compromise with one of its Islamist opponents.

“It’s over. This may not be the final quarter-hour, but the end of terrorism is near,” Algerian Interior Minister Abderrahmane Meziane-Cherif told the Paris newspaper Le Journal du Dimanche. And in the latest in a series of similar reports out of Algeria, he hinted at a potential settlement with the outlawed Islamic Salvation Front, or FIS, a member of the coalition fighting to replace the government with an Islamic theocracy.

Meziane-Cherif repeated the government’s determination to hold a presidential election by the end of the year and suggested that the FIS might be permitted on the ballot. It was not clear how that could be squared with recent Algerian laws barring political participation by religious parties.

U.S. officials in Washington expressed skepticism that a breakthrough is near or that any agreement that might be in the offing would halt the fighting, which has taken an estimated 40,000 lives.

Algerian and other Arab newspapers have reported that the government is conducting secret negotiations with jailed FIS leaders that would permit their return to the political arena if they reject violence and vow to uphold the Algerian constitution. The civil war was triggered after the government scrapped a second-round election scheduled for January, 1992, that the FIS was poised to win.

But the reported talks do not include the more militant Armed Islamic Group, or GIA, which is believed responsible for the worst of the rebel violence and has vowed to continue the battle until the government is overthrown.

Moreover, U.S. analysts believe that any deal that paved the way for real political participation by the fundamentalists would be vetoed by the same powerful military elements that forced the cancellation of the 1992 election.

The latest report surfaced as Algerian President Liamine Zeroual finished two days of talks here with Egyptian President Hosni Mubarak, who is battling a smaller fundamentalist rebellion in the countryside south of Cairo. Egyptian officials said Mubarak reiterated his hopes for an early, peaceful resolution of the Algerian violence and confirmed that the two presidents discussed increased military cooperation.

Egypt and Algeria have charged that the rebel groups, whom they regard as terrorists, receive financial and other support from outside their countries, particularly from sympathizers in Europe. Mubarak has been outspoken in pressing for greater international cooperation in containing “terrorism.”

Algerian government forces have scored a number of recent battlefield successes, resulting in the reported killing of hundreds of insurgents. But rebels still control some rural areas and continue to attack both soldiers and civilians.

Times staff writer Robin Wright in Washington contributed to this story.