Shultz shuttle wins Arab plaudits. AMERICAN MIDEAST ROLE

George Shultz's Mideast shuttle has helped salvage American credentials as an honest broker in the region. It also may have helped stave off a radical end to the Arab summit, which began in Algiers yesterday. True, the US secretary of state's mission failed to persuade Israel, Jordan, the Palestinians, and Syria to join a US-styled peace process. But Arab diplomats and newspaper commentaries are applauding what they see as a new tone to US policy in the region.

They welcome statements by Mr. Shultz that were tougher on Israel than ever before and that demonstrated a greater grasp of fundamental Arab positions.

Upon arriving in Cairo at the outset of the shuttle, he called on all the parties to shed their illusions. Alluding to Israeli policies on the West Bank and Gaza Strip, he said, ``Discrimination and segregation are incompatible with the values of democracy, freedom, and liberty.''

After conferring with Jordan's King Hussein, Shultz indicated that he understood the King's reluctance to join the peace process unless Israel agreed to return lands captured from Jordan in 1967.

In Israel, before a meeting with Prime Minister Yitzhak Shamir, Mr. Shultz criticized the refusal of Shamir's Likud bloc to consider relinquishing control of land seized during war 21 years ago. ``The continued occupation of the West Bank and Gaza and the frustration of Palestinian rights is a dead-end street,'' he remarked.

The tone of Shultz's statements differed markedly from those of his last Mideast trip, in March, when he told Jordanian journalists that there would be no Palestinian state, no full Israeli withdrawal from the West Bank, and no participation by the Palestine Liberation Organization in the peace process.

During that trip, he not only managed to irk the Jordanians but also to convince Egyptian officials that he was hopelessly biased toward Israel.

Aides to the secretary say the United States hasn't changed its position (in favor of a Palestinian-Jordanian delegation at peace talks and an eventual link between Jordan and a Palestinian entity). But in Arab capitals it is being perceived differently.

After Shultz's departure from Amman several days ago, one Jordanian newspaper, Al Dustour, praised the ``new language which has been lacking from US policy for a long time.''

``We welcome this American viewpoint,'' the newspaper said, ``and see it as a sign the American administration is aware of many of the facts of the conflict.''

Egyptian officials, once sharply critical of Shultz, said they were encouraged. ``Shultz is trying to have a good impact on the Algiers summit,'' an Egyptian foreign ministry official said of Shultz's comment on the Israeli occupation. ``He's saying the US is not the kind of devil the Arabs think it is.

``To what extent this will be taken seriously in Algiers, we don't know,'' the official said. ``But it's a good development.''

US officials and Arab moderates had been afraid that the so-called ``intifadah summit,'' called to address the Palestinian uprising in the Israeli-occupied West Bank and Gaza Strip, would take a radical position and, in effect, bury Shultz's plan for a two-phased Arab-Israeli negotiation under an international umbrella. According to unconfirmed reports, the US urged several Arab governments to reject a radical move. Shultz's condemnation of the Israeli occupation was seen as another tactic to shore up Arab moderates and stave off an Arab blast at the Shultz plan.

Egyptian officials and PLO sources now believe that the Arab summit will end with a statement similar to that issued at the close of the Fez summit in 1982. It called for a Palestinian state alongside Israel.

Observers here also said that Shultz's fourth shuttle this year may have achieved another tactical goal, keeping the issue of the occupied territories in front of the Israeli electorate, scheduled to vote in national elections this November. US officials have acknowledged this was one of Shultz's aims in coming out to the region again.

``What Shultz is saying might have an influence on Israeli public opinion,'' a high-ranking Egyptian diplomat said. ``We welcome that kind of talk.''

But the secretary apparently had no illusions himself about going further than this, and he wasn't wrong.

Israeli journalists joked that Shultz was fortunate that Mr. Shamir waited for the secretary to arrive in Israel before Shamir left for the US and a meeting with Soviet Foreign Minister Eduard Shevardnadze.

Shamir is staunchly opposed to the US plan, not only because it provides for an international conference, but because it calls for Israel's withdrawal from occupied territories in return for peace.

Informed US sources say the US will not resort to a tactic that Arab governments would welcome: applying pressure on Israel to agree to negotiations.

``The secretary believes we have a relationship with Israel for certain reasons that don't change just because they do terrible things on the West Bank,'' a US official said. ``Shultz believes that the Israelis have to decide for themselves that they are ready to deal with the issue. He won't threaten them.''

In the meantime, Shultz says he will keep up efforts to move ahead. ``The US will remain heavily involved,'' he said at his press conference before leaving for Madrid. ``We are willing to shape opportunities that exist. ... I hope I'll have another crack at the Middle East in my tenure as secretary of state.''