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Doubts about Mideast peace as Peres arrives. Achille Lauro complicates the search for peace

As President Reagan prepares to meet this week with Israeli Prime Minister Shimon Peres, the prospects for progress toward Middle East peace appear more fragile than ever. The Reagan administration's commitment to the peace process remains as strong as ever, say US officials. But diplomatic observers point to new uncertainties surrounding the role of three key actors in the peace process:

The Palestine Liberation Organization (PLO). Recent terrorist incidents, capped by last week's hijacking of the Italian liner Achille Lauro, raise new doubts about the propriety of any role for the PLO in a new Arab-Israeli negotiation. King Hussein of Jordan has been seeking direct talks between Israel and the PLO over the future of the occupied West Bank.

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The credibility of the PLO was further weakened this week in London when PLO officials were blamed for the collapse of talks designed to open the door to a historic meeting between a joint Palestinian-Jordanian delegation and British Foreign Secretary Sir Geoffrey Howe. The talks were canceled by Britain when one of two PLO delegates refused to sign a statement renouncing terrorism and recognizing Israel's right to exist.

Diplomatic sources say the combination of events, which drew fire not only from the US and Israel but from Jordan as well, has deeply embarrassed King Hussein and left the future of PLO participation in the peace process in question.

``The hijacking raises new doubts in the US about whether the PLO could and should be left out of the Middle East peace process,'' says one Washington-based Middle East expert.

An Israeli spokesman says: ``It underscores the essential point -- there's no room for the PLO in future negotiations.''

Egypt. Repercussions of the Achille Lauro affair -- and Israel's recent raid on PLO headquarters in Tunisia -- have seriously strained Cairo's relations with both Washington and Tel Aviv. Diplomatic observers say that, unless the breach is healed, Egypt's role as a moderating influence in the Middle East could be eroded, compromising chances to revive the peace process.

Egypt had provided indispensable Arab support for the peace initiative launched by Hussein and PLO leader Yasser Arafat.

Jordan. Also uncertain is Jordan's own long-term commitment to the peace process, if Congress refuses to go along with a request for more than $1 billion in new military aid, including advanced fighter planes, anti-aircraft defenses, and other equipment.

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Administration officials say the package is necessary to reward Hussein for risks taken on behalf of peace. But congressional critics say they will block the sale unless Jordan recognizes and formally agrees to sit down with Israel in direct negotiations.

Observers here are reluctant to depict the events of the past two weeks as a decisive turning point in efforts to generate momentum for the peace process. Administration officials insist that the escalating pattern of terrorism in the Middle East is an argument for -- not against -- redoubling these efforts.

They also maintain that, despite the complications posed by the Achille Lauro incident, there may be no realistic, long-term alternative to dealing with the PLO, once PLO leaders recognize Israel's right to exist and renounce terrorism. Jordan has not ``given up'' on the PLO, a senior administration officials said yesterday.

Still, recent events are expected to intensify the search for some interim Palestianian bargaining partner. The key here is to find Palestinians who are not members of the PLO but who have sufficient standing in the Arab world to make any negotiations with Israel credible.

The administration is also expected to step up its search for some international forum to serve as an umbrella for direct negotiations involving Israel, Jordan, and non-PLO Palestianians.

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