Mideast Peace Talks Accelerate as Israel Hints at Compromise

AFTER languishing for months, the Middle East peace process is suddenly showing new signs of life.

On Monday, Israeli Prime Minister Yitzhak Rabin assumed office and immediately set his country on a new course, pledging not to "lose precious time" in negotiating an interim peace agreement with neighboring Palestinians.

On Saturday, Secretary of State James Baker III will fly to Jerusalem and four Arab capitals to spur preparations for the resumption of formal peace talks in September.

Next week, leaders of the Palestine Liberation Organization meet to fashion a response to what many diplomatic observers believe may be the most propitious moment for Middle East peacemaking in 40 years.

Undergirding this flurry of activity is new confidence in the Bush administration that, under Mr. Rabin, Israel will now be rowing with the United States and not against it as the Bush administration seeks to bring decades of conflict between Arabs and Israelis to an end. (Arabs await policy, Page 3.)

"The key point is that we're starting from both sides wanting [the peace process] to work and having the basic trust that will enable us to get over the rough spots," says one US official.

The election of Rabin is a boon for President Bush, whose firm dealings with Israel under defeated Prime Minister Yitzhak Shamir put him in trouble with many American Jewish voters. Mr. Bush is expected to take advantage of the months remaining before election day to mend fences with Jewish groups who are also being courted by Democratic presidential candidate Bill Clinton, a proponent of a Reagan-style policy of unconditional support for Israel.

Rabin has been invited to meet with Bush at the summer White House in Maine in early August. The test, in the eyes of Jewish voters, is whether Bush will then drop his opposition to an Israeli request for $10 billion in loan guarantees to help settle immigrants from the former Soviet Union.

Bush blocked the request last spring because of Mr. Shamir's policy of expanding Jewish settlements in the occupied West Bank and Gaza Strip.

Yesterday Rabins's housing minister said he has stopped the issuance of new contracts for the construction of Jewish settlements in the occupied territories.

To pave the way for fruitful discussion of the loan guarantees during Rabin's August visit, analysts speculate, he would have to formalize his commitment to halting new construction in the West Bank.

Baker needs such an agreement to convince Arab leaders that Rabin is truly setting Israel on a different course.

"Baker will be looking for something fairly general with the details left unspoken," says the US official. "It was exactly the opposite with Shamir, where we had to put everything in writing because there was no trust." Palestinian autonomy

The other main issue Rabin and Baker will discuss is Palestinian autonomy. The US backs the Camp David framework of limited Palestinian self-rule during a transition period in which the final status of the West Bank and Gaza Strip would be negotiated.

While committed to putting autonomy talks on a fast track, Rabin has not indicated how much self-rule he would allow. The Bush administration's main interest is getting the transition arrangements set quickly so the parties can move on to the final-status talks. The US official says the Bush administration will leave details of autonomy to the parties. The threshold of acceptance for the US, say other analysts, would be arrangements that would not prejudice the final-status talks. `Selling Rabin's merchandise'

If Baker and Rabin can agree on the outline of an autonomy plan, Baker would have something he could endorse in advance of the September round of talks, setting the stage for a new US role. While Arabs once hoped Washington would pressure Israel for concessions, Baker would now be seeking to convince the Arabs that the Rabin plan is something they should take seriously.

"Selling Rabin's merchandise in the Arab world will be a lot easier than selling Shamir's," comments a Washington-based Israeli journalist.

Bush administration officials express satisfaction that after five rounds of peace talks, Israel and its Arab neighbors - Syria, Jordan, Lebanon, and the Palestinians - are seriously engaged. But the talks have produced no substantive breakthroughs.

Rabin appears more conciliatory than his hawkish predecessor. He has indicated a willingness to relinquish control of a portion of the West Bank and Gaza to gain a final peace settlement with the Palestinians.

Unlike Shamir, moreover, Rabin is willing to allow the development of a local Palestinian leadership - both by reaching an autonomy agreement quickly and by holding West Bank- and Gaza-wide elections - as a means of providing a political counterweight to the PLO. "Rabin knows an agreement in hand will be the best weapon against outside Palestinians," says Robert Satloff, deputy director of the Washington Institute for Near East Policy.