Does ''Happy birthday, dear Leonid'' signal closer Soviet-Eygptian relations?

Egyptian President Hosni Mubarak dispatched a ''polite'' greeting to Soviet leader Leonid Brezhnev on his recent 75th birthday - drawing appreciative private remarks from Soviet officials.

Arab and Western diplomats in Moscow view the birthday exchange as part of cautious moves on both sides toward restoring ambassadorial-level relations between the two. Ties were cut back under former Egyptian President Sadat.

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One ranking Soviet official says Moscow does sincerely want better ties with Egypt - but suggests the next move is up to Cairo. And he adds that an Egyptian initiative seems unlikely before Israel returns the final part of occupied Sinai to Egypt in April.

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