Peres signals urgency for progress in Mideast peace effort. On European tour, Israeli leader displays some flexibility on Palestinian issue

Israeli Prime Minister Shimon Peres is using his 10-day European tour to deliver a strong message to Jordan's King Hussein: Time is running out for peace negotiations to begin between their nations. Mr. Peres is acutely aware that in October he will be handing over his premiership to Foreign Minister Yitzhak Shamir, who heads the hard-line Likud bloc that opposes territorial concessions to Arabs. In private meetings and in public speeches during his tour this week of the Netherlands, England, and West Germany, the Prime Minister is stressing the need to quickly overcome remaining obstacles to convening an international peace conference.

``If something does not happen in the next two months, the opportunity will be lost,'' said a senior Israeli official. ``That is our message to Hussein.'' Some Israeli, United States, and Jordanian officials cite March 1 as a deadline. On that date, a US arms sale to Jordan is scheduled to go through. But, if there is no sign of progress toward direct Israeli-Jordanian negotiations, Congress is expected to cancel the $1.9 billion sale. In addition, some Israeli analysts say, each passing month makes it increasingly difficult for Peres to avoid the transfer of power in October.

``1986 is a crucial year,'' Peres said in a speech Wednesday to the Royal Institute of International Affairs in London. ``It may be the best year for peace. If wasted, the opportunity may never return.''

Peres seems to have got this message across to the Reagan administration. Richard Murphy, assistant secretary of state for Near Eastern and Asian Affairs, has been shuttling between Peres and King Hussein in an effort to narrow differences between the two on the form of an international conference and on who will represent the Palestinians in peace talks. Mr. Murphy met with Hussein last week in London, then met Peres in The Hague . Murphy then returned to London and Hussein, who left Tuesday. The US envoy met again with Peres Wednesday.

Israeli and US officials were tight-lipped about the contents of the meetings, but one Israeli source said privately, ``For the first time, I think the Americans are optimistic about this process.'

In his speech Wednesday, Peres seemed to be sending a message to the Jordanians, Americans, and Europeans, that he is willing to be flexible on some issues.

He spoke, for the first time, of a need to ``facilitate Palestinian self-expression.'' This stopped short of the recognition of the Palestinian right to self-determination, which the Palestine Liberation Organization (PLO) has insisted must be a basis for peace negotiations. But it went further than Peres, or any other Israeli leader, has been willing to go publicly toward recognizing the need to deal with the Palestinians as a people with political aspirations beyond those of refugees.

``While we are eager to reach an accommodation with all of our neighbors, the promise seems to lie with our neighbors to the east, the Hashemite Kingdom of Jordan and the Palestinian people,'' Peres said. ``Indeed, the issue reaches across peoples and states. Its resolution should also facilitate Palestinian self-expression.''

Peres also seemed to be calling on the PLO again to renounce terror in exchange for a possible role in the peace process. The PLO's role has been a major obstacle in moving the process ahead. Jordan has insisted it must coordinate movement with the PLO, while Israel and the US insist that until it renounces violence and accepts key UN resolutions as the basis for negotiations, the PLO is an unacceptable partner.

In his speech, however, Peres did not exclude the PLO specifically.

``It is the Palestinians who must choose between radical policies, evasive tactics, violent means on the one hand and a moderate position, willingness to compromise, and a commitment to peaceful dialogue on the other,'' the Prime Minister said.

Peres also offered a warning that if negotiations do not begin soon ``the option to stall, to wait, to do nothing, is not acceptable. It may invite undesirable consequences.'

Israel has ``no desire to control the lives of the people in these territories [the West Bank and Gaza],'' he said, and may therefore implement unilateral autonomy. Under this, Israel would still maintain control, but allow the 1.5 million Palestinian residents greater freedom in running their day to day lives.

The speech is likely to anger the Likud half of Peres's coalition government. But that is an effect Peres's aides say they would not mind. Hussein has been saying for a year that time is running out for talks to start. For Peres, that prediction is becoming painfully real.

``The most important goal now is to avoid rotation [with Mr. Shamir],'' said a senior Israeli official, who spoke on condition he not be named. Peres's aides say they believe the issue of peace with Jordan is the only honorable issue over which to bring down the government and win new elections.

This week, the US, Israel, Jordan, and Europe, all seemed to be working to bring that ``honorable issue'' closer to realization.