AMMAN, JORDAN — ISLAMIC fundamentalists here are strongly opposed to peace talks with Israel, posing a serious dilemma for King Hussein: whether to backtrack on the peace process or reverse Jordan's two-year-old democratization effort."Both options can lead to a catastrophe for this country. Democracy should be preserved to consolidate Jordan's position at the peace conference," says one analyst close to the government. This week the Cabinet of Prime Minister Taher al-Masri cracked down on the Muslim Brotherhood, the largest, right-wing opposition group, and other critics. In less than 24 hours, the government banned a Brotherhood rally planned for today, stopped the distribution of the movement's weekly newspaper, and censored another, leftist weekly. The showdown between the Cabinet and the Brotherhood, which dominates the Jordanian parliament, started earlier in the week when the movement led 50 of the 80 parliament members in calling for the government to step down. The call followed the resignation of five ministers who opposed talks with Israel. The petition did not carry any constitutional weight since the parliament is in a prolonged recess in accordance with a decree by King Hussein. But it was seen as a serious political statement because it was signed by a large number of traditionally loyal East Bank delegates as well as some leftists and Arab nationalists. Many East Bank deputies - a group of 18 known as the Constitution bloc - are upset not so much because of the planned conference but because they feel threatened by a democratization process that has given a bigger role to Palestinians and leftists, say political analysts here. The bloc was not included in a recent Cabinet reshuffle. The king will appeal for public support for his commitment to the planned Middle East peace conference at a national congress on Saturday. The congress was to have been held yesterday, but was postponed because the palace said the king has a "minor health problem." This delay has apparently halted, or at least put off, more political conflict between the government and the Brotherhood. The Brotherhood has also backed down on its a vow to go ahead with its rally, which was viewed as a direct challenge to the palace's national congress. "We believe that the government is very nervous. We are not ready to be dragged into any confrontation with the government that might affect the stability of the country," says Ahmed Qteish al-Azaideh, a Brotherhood spokesman. The delay of the congress will give Prime Minister Masri time to try to heal the rift with the Constitution bloc. The current turmoil began when the king extended the parliament's recess. The move was interpreted - by fundamentalists, critics, and even supporters of the government - as an attempt to bypass the parliament's opposition to the peace talks by appealing to the public directly through the national congress. "If [the government] wants to use unconstitutional means to secure popular blessing for the peace conference, [then] we shall also directly appeal to public opinion," warns deputy Leith Eshbeilat, an independent fundamentalist.