Tel Aviv, Israel — RELATIONS between Egypt and Israel, severely strained almost since birth, are approaching a critical turning point. If they move in the right direction, a forum can be found promptly for resolving outstanding territorial disputes; the pace toward normalized bilateral relations can quicken; and Egypt can play a constructive role in bridging the gap between Israel and several of the more moderate states and political factions in the Arab world. If, on the other hand, Egyptian-Israeli relations move in the wrong direction, the historic ``land for peace'' formula of Camp David will be fatally discredited, other bad situations will continue to fester, and, in the long run, the ``chill'' between Cairo and Jerusalem may once again move toward hot conflict.
The United States now has the opportunity to influence the situation for the better, perhaps decisively. Both Egypt and Israel are good and valuable friends of the US. Both are heavily dependent upon Washington for economic and military assistance. Particularly as regards relations with each other, both look to Washington for guidance and mediation. Now on the eve of President Hosni Mubarak's state visit, America has a powerful hand to play.
The relationship between Egypt and Israel has suffered from a series of hard blows, several of them self-inflicted. There was, to begin with, the failure of Jordan and the Palestine Liberation Organization to opt into the peace process, coupled with the active opposition not only of the radical Arab states, which had been anticipated, but of the moderate ones -- particularly Saudi Arabia -- from which more had been expected. This increased Egypt's diplomatic and financial isolation in the Arab world, a situation further aggravated by the revolutionary developments in Iran.
While fully observing its treaty obligations regarding the return of the Sinai, the government of Menachem Begin undertook several other actions that placed terrible stress on Cairo, both internal and external.
These included the establishment of numerous Jewish settlements in the heart of Arab-populated West Bank areas, a constrictive interpretation of the ``autonomy'' for Palestinians mandated by Camp David, the attack on Iraq's nuclear reactor, the formal annexation of Jerusalem, the extension of civilian rule to the Golan Heights, and, finally, the invasion of Lebanon and the Phalangist massacres at Sabra and Shatila.
Anwar Sadat's lack of attention to areas of potential domestic unrest, his assassination in circumstances suggesting widespread disillusionment with his regime, and the consequent efforts of President Mubarak to repair both his domestic political base and Egypt's network of traditional external relationships further complicated affairs with Israel.
Egypt's ambassador, recalled from Tel Aviv soon after the Lebanon campaign began, has still not returned to his post. Trade, tourism, and cultural exchanges with the Israelis -- fundamental elements of the Camp David accords -- have been torpedoed by Egypt. Anti-Israel propaganda, some of it Nazi-like in its vilification of Jews, has appeared in the Egyptian media, while press and propaganda organs close to the government have done far too little to dissociate the regime from such sentiments.
The Israelis have tried to use what little leverage they have with Cairo by sitting on some 15 disputed parcels of land along the border with Sinai, the most notable of which is Taba, a strip of about one square mile on the Gulf of Aqaba, about seven kilometers south of Eilat.
Taba, captured and returned by Israel in 1956 and taken again in 1967, now boasts a plush Sonesta Hotel and other amenities. The merits of the dispute are secondary to the fact that Israel has prevented the matter from moving to arbitration under a formula sanctified by the Camp David treaty.
Egypt has made resolution of the Taba question one of the three stated conditions to the resumption of normalized relations, the others being a firm Israeli commitment to withdraw from Lebanon and the use of such ``confidence-building measures'' on the West Bank and Gaza as the release of political prisoners and easier access of Arab commercial investment into the territories.
In talks with officials and diplomats of both countries one is struck by the unfortunate tendency to view the conduct of each country in the worst possible light.
Many Israelis who should know better interpret President Mubarak's actions simply in terms of his desire to restore Egypt to its pre-Camp David place of leadership in the Arab world while preserving only so much of Camp David as is required to keep Israel from retaking the Sinai.
For their part, Egyptian officials seem unaware of the sense of betrayal felt by many Israelis who thought they were trading the security of land for real peace rather than a technical state of nonbelligerence.
In the short run, this palpable sense of betrayal makes it difficult for the current Israeli government -- which genuinely seeks good relations with Cairo -- to be more forthcoming on the Taba question or to press very hard with ``land for peace'' formulas elsewhere.
The longer-run danger is that governments could come to power in either Cairo or Jerusalem that would see so little content to Egyptian-Israeli peace as to be willing to discard Camp David altogether.
Nothing would better get the Egyptian-Israeli relationship back on the right track than Israel's agreement to submit all existing border disputes -- including Taba -- to arbitration, coupled with Egypt's agreement to send its ambassador back to Tel Aviv at a certain date and to prepare for a summit meeting between President Mubarak and Prime Minister Shimon Peres.
This is a reachable objective for the US , if my reading of private conversations with Egyptian and Israeli officials is correct, and could be an appropriate target for US policymakers during the coming Mubarak visit.
The Israeli Cabinet decision to withdraw from Lebanon in stages, together with completion of the first withdrawal phase next Monday, could reasonably be interpreted as satisfying the second Mubarak condition for normalization.
There have also been several signals that Israel is ready to ameliorate conditions on the West Bank and Gaza, an inclination that could well be reinforced by the tangible prospect of better relations with Egypt.
Egypt's return to a position of leadership in the moderate Arab world should be encouraged as a useful and logical process rather than condemned as opportunistic treachery. Its economic and military needs should receive a sympathetic hearing on their own merits, the understanding being that Egypt would serve America better as a regional force for political moderation than as a disguised military base.
The US message to Mubarak should be clearly articulated. Assistance to Egypt cannot be divorced from investment in the regional peace process. Even in a difficult market, wise investors require a return.
C. Robert Zelnick is the ABC News correspondent in Tel Aviv.