Cairo talks seem to open way for Peres, Mubarak meeting. Summit would take up Palestinian issue, expanding bilateral peace

Last-minute obstacles to holding the long-delayed summit between Israeli Prime Minister Shimon Peres and Egyptian President Hosni Mubarak appeared Wednesday to have been resolved, Israeli officials said. As this went to press, Egyptian, Israeli, and American negotiating teams still were conferring in Cairo but Egyptian and Israeli sources said that final agreement on the terms of arbitration over the Taba border dispute was within reach. Mr. Peres was expected to leave for Egypt Thursday morning barring any hitches.

The Peres-Mubarak summit is likely to last only a few hours, according to informed sources, but it has taken on disproportionate symbolic and political significance for Israel, Egypt, and the United States. It will be the first ever meeting between Peres and Mubarak, and the first between an Israeli prime minister and Egyptian President in five years.

The summit has become almost a political necessity for Peres. He began pushing for the meeting when he assumed office in 1984. And he desperately wants it to take place before he hands over the premiership to his hard-line Likud rival Yitzhak Shamir in October.

But for Mubarak, the summit was a most unattractive prospect. He has spent much of his presidency seeking to restore Egypt's role in the Arab world, and has kept his distance from Israel. But the summit was made almost unavoidable by Egypt's increasing dependence on the US for massive economic aid. Remarked one American diplomat Tuesday, when it appeared for a brief time that talks between the Israelis and Egyptians had broken down: ``Tactically, it would be a terrible mistake for Mubarak to allow this process to collapse. Capitol Hill would not be understanding.''

Peres has been ridiculed by the Likud, which with its allies comprises one-half of the government, for his lack of progress toward opening peace talks with Israel's Arab neighbors. The Likud has pointed to Peres's failure as bolstering its view that the Arab states have no interest in negotiating with Israel.

The most extreme attack on Peres was made last week by Trade Minister Ariel Sharon, who said that last Saturday's massacre of Jews in an Istanbul synagogue was the result of Israel's repeated assertions that it wants peace. Mr. Sharon's remarks provoked a Cabinet crisis, and he was forced to apologize to Peres.

Peres's aides see the summit as the capstone of his term in office, and as an opportunity to establish a bench mark in dealing with Arab states that Peres's Labor Party intends to hold the Likud to after rotation.

The oft-delayed summit also has taken on symbolic significance for the Reagan administration, which has enjoyed few policy successes in the Middle East. The 1979 US-brokered peace treaty between Egypt and Israel is considered the cornerstone of US influence in the region. The deterioration of Israeli-Egyptian ties since Israel's 1982 invasion of Lebanon, and the failure to expand the peace process are seen by American analysts as a threat to the US's role as peace broker.

Following the collapse last February of Jordan's efforts to coordinate peace efforts with the Palestine Liberation Organization, the US had put new emphasis on improving relations between Israel and Egypt as the first step toward improving chances of peace talks between Israel and one or more of its Arab neighbors.

For two years, culminating in this week's direct involvement by US envoy Richard Murphy in the Israeli-Egyptian talks, the Americans put enormous effort into resolving the border dispute between Israel and Egypt. The dispute revolved around a sliver of Sinai sand called Taba, claimed by Egypt and controlled by Israel since the Camp David peace treaty was signed in 1979.

Mubarak had insisted that the Taba dispute be handed over to binding international arbitration before he would meet with Peres. The process of hammering out an agreement on the terms of arbitration consumed thousands of hours of work by teams of Israeli, Egyptian, and American lawyers and government officials.

Crowed one delighted American diplomat in the region Wednesday afternoon, ``We have achieved the first peacefully negotiated border rectification between Israel and an Arab state, and that is a hell of an achievement.''

What will be achieved during the Peres-Mubarak meeting remains to be seen. Egypt has insisted that the focus of the summit must be the Palestinian issue. One condition Mubarak placed on holding a summit was an improvement in conditions for Palestinians living in the Israeli-occupied West Bank and Gaza Strip. Egypt has pushed for Israeli recognition of the PLO as the representative of the Palestinians, and has argued that the PLO must be included in any further Mideast negotiations. Israel refuses to deal with the PLO which it has branded a terrorist organization. Egypt must discuss the Palestinians to defuse Arab anger at the meeting, and to press home to Israel that Egypt still clings to the hope that its separate peace treaty with Israel will one day grow into a comprehensive Mideast peace settlement.

For his part, Peres has said he too intends to make expansion of the peace process and the Palestinian problem his top agenda item. The Likud continues to fret that the prime minister may make some 12th-hour concessions on the Palestinian issue that Likud will be unable to live with, thus jeopardizing the scheduled rotation.

But Israeli analysts say it is unlikely that Peres, with no visible Arab partner in sight for peace talks, and with his nation still reeling from the Istanbul masacre of 21 Jewish worshipers, will be willing to risk the breakup of the government and an election fight with the Likud over Israeli concessions on the Palestinian issue.

Instead, sources say, the summit will offer a chance to demonstrate that the peace treaty with Egypt is alive and well, and underscore the importance Labor places on what Peres has dubbed his ``peace offensive.''