Palestine Issue Defies Bush Optimism

FLUSH with confidence over the outcome of the Gulf war, a buoyant President Bush voiced optimism last week that the time was ripe to tackle the Middle East's thorniest problem: the Israeli-Palestinian dispute. ``What I really believe is that the conditions [for a diplomatic settlement] are better than ever,'' Mr. Bush said Friday, adding that the ``British and the French and other coalition partners are very interested in moving forward.''

But far from being better, conditions for resolving the Palestinian issue may actually be worse than they were before the start of the Gulf crisis, many diplomatic analysts say.

Against the interest generated by the crisis in ``moving forward,'' they weigh these new and stubborn realities:

Palestinian support for Iraq has further polarized the Arab and Jewish communities in Israel and its occupied territories. Prospects for political compromise have been reduced. The influence of moderates on both sides has diminished.

The war has hastened Israel's drift rightward. The Likud government of Prime Minister Yitzhak Shamir now embraces new, more extremist views. For now, at least, it has closed the door to territorial concessions long regarded by the international community as essential to a negotiated settlement.

Even the gains of war may not translate into gains for peace on the Palestinian issue. Despite Iraq's crushing defeat, Israelis feel more vulnerable and thus less willing to take risks for peace.

Meanwhile, although the United States has emerged from the war with considerable prestige, the Bush administration has declined to use it to pressure the parties to the conflict to reach a settlement.

``We will not go there with any ideas to impose on people, and that includes the Israelis,'' comments one State Department official, speaking on the eve of five-nation tour of the Middle East by Secretary of State James Baker III.

``There's still an opportunity to put the pieces together but it will be devilishly difficult,'' says former US ambassador to Israel Samuel Lewis.

The latest of many proposals designed to resolve the Israeli-Palestinian dispute was unveiled by Mr. Shamir in May 1989. Under pressure from hard-liners the plan was shelved last year, but it remains Israel's blueprint for peace.

When they greet Mr. Baker in Jerusalem next week, Israeli leaders will stress that implementation now depends on the willingness of Arab states to end their 43-year state of war with the Jewish state.

Diplomatic analysts say that getting the peace process back on track will require finding some way to meet Arab and Israeli preconditions simultaneously.

Gulf state officials have indicated privately to visiting Americans that they are ready to consider normalizing relations with Israel, but only if there is progress on the Palestinian issue first.

Israel says the Arab states must take steps toward recognition first. Israeli sources say ending the state of hostility with Israel, a step short of diplomatic recognition, is one possible token of good faith.

If Baker arrives in Israel from Arab capitals with a concession in hand, Shamir will be under pressure to respond, perhaps by setting an early date for Palestinian elections.

Any such exchange of concessions could start a serious diplomatic process.

For its part, the US is seeking to advance its own ``two-track'' policy - linking the peace process with normalization of relations - by promoting confidence-building measures that would bring Israel and the Arab states together in regional arms control and economic-development efforts.

``The opportunity [provided by the end of the Gulf war] will require bringing the Saudis and Kuwaitis to formal acceptance of Israel,'' says Ambassador Lewis, who now is president of the US Institute of Peace. ``By doing that, there's some chance of cracking the Likud's redoubt.''

PROSPECTS for resolving the Israeli-Palestinian conflict will also hinge on finding an acceptable formula for factoring Palestinians into future peace talks.

West Bank and Gaza Palestinians have long insisted that only the Palestine Liberation Organization can bargain on their behalf.

But with Israel, the Gulf states, and the US all eager to crowd the PLO out of the picture, local Palestinians may be forced to bend to Israel's urging to select their own representatives.

``Let's face it, the movement has been weakened; there will have to be more flexibility,'' comments one West Bank Palestinian who asked not to be identified. ``In a situation of weakness and isolation, although it may be temporary, the PLO may be susceptible to such options.''

Another way around Israel's adamant refusal to talk to the PLO is through Jordan. Like the PLO, Jordan has been widely discredited because of its support for Iraq during the Gulf war. Even so, many believe that Jordan's long-reigning monarch, King Hussein, may hold the key to getting Palestinians to the bargaining table in a manner acceptable to Israel.

``[PLO chief Yassir] Arafat is so discredited and demonized for Israel that there is little chance for meaningful negotiations with him,'' says the West Bank Palestinian. ``The King will have to be brought into the picture.''

The prospect has been welcomed by the King himself, who recently resurrected the idea of an international Middle East peace conference at which Palestinians would be represented in a joint delegation with Jordan.

Shamir vetoed the idea when it was floated by Hussein and then-Israeli prime minister Shimon Peres in 1987.

A role for Jordan ``would not necessarily be rejected out of hand today,'' one Israeli official predicts. Even Mr. Baker acknowledged recently that ``Jordan and King Hussein himself personally may become an important player in this.''

Optimism is a fragile thing when it comes to Middle East peacemaking. Skeptics say that, despite the public relations drubbing it has suffered, the PLO is more popular than ever in the territories, casting doubt on the idea that West Bank and Gaza Palestinians would bypass the PLO or entrust their fate to Jordan. Even if Israelis and Palestinians managed to get to the bargaining table, a grant of even minimal autonomy to Palestinians would almost certainly shatter Israel's fragile coalition government, threatening prospects for ratification.

Last of five articles on consequences of the Gulf war.