IF the Madrid peace talks have taught one lesson so far, it is that James Baker III's work has only just begun.No sooner had the Arabs and Israelis sat down to their first bilateral negotiations on Nov. 3 than they concluded they were unable to agree on the first issue on the agenda: where to meet next. Their instant shared reaction was to turn to the United States secretary of state to resolve the problem. "All the parties are waiting for proposals from the [conference] cosponsors to suggest new venues for the talks," said Syrian Foreign Minister Farouk al-Sharaa just before leaving Madrid. Asked why Israel, which insists that the talks move to the Middle East, and the Arabs, who want to keep them in Madrid, were unable to hammer out a solution by themselves, Jordanian delegation leader Abdulsalaam al-Majali replied, "When I say one thing and you say another, somebody has to help us reach a compromise." He hoped, however, that "this will change, and people will get down to business" once the bilateral talks between Israel and its neighbors reconvene. That is expected to happen within two or three weeks, according to conference participants. Mr. Baker has offered Washington as a compromise site, according to diplomats here. The Israelis and joint Jordanian-Palestinian delegation gave up trying to choose a venue quickly, according to Palestinian team member Ghassan al-Khattib, because "none of us was under any illusion that even if we talked forever, that we would ever agree." Mr. Khattib sees this pattern asserting itself for as long as the talks last. "We will always need a third party," he says, "whose presence is very heavy, even if it is not physical. These are not really bilateral talks at all." Baker promised, in his closing speech to the conference, that "the United States, at the highest levels, will remain intimately engaged in this process." That pledge was a welcome one to the Palestinians, and indeed to the Syrians, who are confident that Washington's position on the key issues to be negotiated - such as the future of the Golan Heights and an Israeli withdrawal from the occupied West Bank and Gaza Strip - is closer to Arab demands, based on United Nations resolutions, than to the Israeli stand. Referring awkward issues to the US for arbitration "will be easier than sitting alone with the Israelis," Khattib predicts. Fundamental to the talks will be UN Resolution 242, which calls for a withdrawal from territories Israel occupied in 1967, and secure boundaries for the Jewish state. This is the basis for the negotiations, according to the conference invitations. At their first meeting, the Israelis agreed with the Palestinian-Jordanian team on 242 as a basis, but what looked like a breakthrough in fact hides the real difficulty. The two sides differ radically in their view of what Resolution 242 actually means. For the Arabs, it means a full Israeli withdrawal from the Golan Heights, the West Bank, and the Gaza Strip, a "land-for-peace" deal to which Washington and Moscow also subscribe. The Israelis argue that by pulling out of the Sinai under the Camp David accord with Egypt, they withdrew from over 90 percent of the territory they captured in 1967, and have thus complied with Resolution 242. "We subscribe fully, one hundred percent, to Resolution 242," Israeli Deputy Foreign Minister Benjamin Netanyahu insisted. But as he enumerated the elements of 242 with which Israel agrees, he omitted its reference to the inadmissibility of territorial acquisition by war. The problems over the resolution also came up immediately at the Israelis' talks with the Syrians, according to a source close to the Syrian delegation. No matter what issue the Israelis raised, the source said, the Syrians repeatedly referred back to 242, demanding an Israeli commitment to withdraw from the Golan before further discussion. Although Syrian Foreign Minister Sharaa expressed "regret" at the lack of substantive negotiations in Madrid, delegates from all the other parties voiced varying degrees of satisfaction with the results of the conference. None were happier than the Palestinians, for whom the meeting has already proved a turning point. "We are gratified that the Palestinian identity has finally received the recognition that it deserves," Mr. Majali said, pointing out the ways in which the Palestinian delegation was treated as a separate entity at the meeting. Palestinian delegate Khattib says, "The Gulf war left us in a miserable situation, politically isolated, our morale low, our image distorted, and facing economic disaster." But now, he argues, "the Saudis are ... willing to pay, our image has improved dramatically, and our morale is up." But in the private talks, said Palestinian Hanan Ashrawi, "You are not performing, you are not addressing public opinion, you are trying to achieve results."