Iran, Iraq said leaning toward proposal to break peace talks impasse. If Iran accepts freedom of navigation, Iraq would delay Shatt al Arab issue

Iran-Iraq peace talks in New York adjourned this week with the two countries considering a United Nations proposal aimed at breaking an impasse in negotiations. Both sides are understood to favor the proposal. Iraq, at least, won't formally answer the UN Secretary-General until later this month, when the belligerents have agreed to renew talks in Geneva.

The Secretary-General's latest proposal reportedly involves:

A timetable for early withdrawal of forces to the internationally recognized boundaries.

A timetable for the exchange of war prisoners.

Iranian guarantees of freedom of navigation in Gulf waterways.

Iraqi agreement to postpone discussion of ownership of the coveted Shatt al Arab until a later stage, under Paragraph 4 of UN Resolution 598, to negotiate settlement of all outstanding issues.

Iran reportedly accepts the wording ``freedom of navigation,'' but hasn't specifically renounced the right to search ships entering the Gulf. It's not clear if Iran will continue that practice.

Speaking to the UN General Assembly this week, Iranian Foreign Minister Ali Akbar Velayati said Iran has been working with the UN ``to achieve an acceptable, principled formula'' on the issue.

Iran claims the right to search for belligerent cargo in all Gulf ships that enter an ``Iranian war exclusion zone'' until a proper peace treaty is concluded. The practice is recognized under international law, and even the United States did not protest when Iran once stopped and searched a US ship.

But Iraq has demanded that Iran prove its sincerity about peace by halting the practice now that a cease-fire is in effect and before other issues are discussed.

Iran's foreign minister also told the UN that Iran ``will demonstrate its good will for the realization of a lasting peace in the region - but will resist ... emasculation of its indisputable legitimate rights.''

Iraq had wanted the Secretary-General's proposal specifically to forbid the searching of ships. Nevertheless, an Iranian diplomat reported that some of the five permanent members of the UN Security Council believe that Iraq is considering the proposal favorably.

By withholding its answer until the Geneva sessions resume, Iraq underscored its objection to New York as a venue for talks. Iraq has complained that the US is subjecting it to a ``malicious campaign,'' including sanctions proposed by Congress for alleged chemical weapons use against Iraqi Kurds.

In a UN speech this week, Iraqi Foreign Minister Tareq Aziz blamed the campaign on ``Zionist circles which have allied themselves with the Iranian regime throughout the war.'' Iraq agreed to the New York meeting only on the condition that it would be a one-time event, and not a continuation of the Geneva sessions.

Efforts to extend Iran-Iraq peace talks at the UN this week fell through on Tuesday, when Mr. Aziz left New York ahead of schedule.

A direct meeting last Saturday between Aziz and Mr. Velayati produced no breakdown, but no breakthrough, according to UN Secretary-General Javier P'erez de Cu'ellar.