Shamir's Tough Choices

ISRAEL'S Prime Minister Yitzhak Shamir confronts two unwelcome options as the divided coalition government tries again next week to decide how and whether to board the Middle East peace train. He can agree to a United States proposal that would open the door to immediate peace talks with Palestinians, but that would creat splits within his own Likud Party. Or he can block the US proposal and risk the future of Israel's 15-month-old coalition government.

``If he accepts the [US] clarifications, he loses the leadership of Likud; if he does not, he loses the coalition. Whatever he decides he will face a problem,'' says a Cabinet minister, a member of the Labor Party, which is the junior partner in Israel's National Unity government.

``The rope is getting shorter and shorter,'' says a senior Israeli official aligned with Likud.

A crisis over the peace process was sidestepped Wednesday, when Israel's inner cabinet postponed until Sunday a debate over a US proposal to convene peace talks in Cairo. The formula put forward by US Secretary of State James Baker III would bring Israeli and Palestinian delegations together in the Egyptian capital to discuss plans for proposed elections in the occupied West Bank and Gaza Strip. These would be followed by negotiations over the future status of the territories.

The agonizing deliberations over the peace process highlight the weakness of a government that has become immobilized by factionalism. Public opinion in Israel is also divided over how to respond to Arab pressure for self-rule in the territories, which has been intensified by the 27-month Palestinian uprising.

On Monday, Likud ministers agreed that Israel should participate in the Cairo talks, but only if Labor agrees to bar residents of East Jerusalem from the proposed elections and to quit the talks if Palestinian delegates claim to represent the Palestine Liberation Organization (PLO).

Labor ministers rejected the conditions, insisting that they will withdraw from the coalition unless Likud agrees to the Baker formula.

After 10 months of debate, consensus has foundered on the two bedrock issues that have long been at the center of the Israeli-Palestinian dispute:

The role of the PLO. Both the Labor Party and the US say it is unrealistic to think that the peace process can proceed without an indirect role for the PLO, which Palestinians regard as their only legitimate representative.

A source close to Likud's Shamir responds that Israel's intention is to make the PLO ``irrelevant.'' Other Likud sources criticize the US for favoring the inclusion in the delegation of at least one deportee associated with the PLO, a concession the US and Labor say is needed to draw West Bank and Gaza Palestinians into the peace process.

``Our basic notion is that the PLO should be out,'' says Likud Knesset member Uzi Landau. ``Now you see the US bringing the PLO in the main door.''

The status of Jerusalem. Likud ministers also oppose allowing Arab residents of East Jerusalem to participate in peace talks or to vote or stand in future elections. Labor ministers say Baker's compromise language that would allow West Bank residents who have an apartment or office in Jerusalem to join the talks would not compromise the future status of the city, which all Israelis regard as their indivisible and permanent capital. Palestinians envision Jerusalem as the capital of a future Palestinian state.

Sensitivities on the issue were heightened this week when the US equated Jewish suburbs in East Jerusalem, which Israel annexed in 1967, with West Bank settlements, then called for a settlement freeze in both. The position was later softened.

Debate on how to respond to the Baker formula will resume at Sunday's meeting. Labor leaders say if no decision is made they will convene the party's central committee Monday to recommend Labor leave the government.

``The coalition has no long life,'' predicts the Cabinet minister.