FEARFUL of an embarrassing loss of face, the Israeli Cabinet declined yesterday to drop its demand that the upcoming round of Middle East peace talks be postponed until next week.But officials here said they still hoped that continuing behind-the-scenes efforts with Washington would win assurances about the future of negotiations that would eventually persuade Israel to attend the talks on Dec. 4. Syria, Lebanon, and Jordan and the Palestinians have all accepted that date, proposed by the United States, for the start of one-on-one negotiations in Washington between Israel and the Arab delegations. The US administration refused Israel's request to delay the talks until Dec. 9 and has so far also refused to back Israel's demand that the following round be moved to a venue closer to the Middle East. "We have set out our position, and if some of our points are satisfied - not all of them but some of them - then we shall be there" on Wednesday, said one official close to the peace negotiations. Though the Cabinet avoided an awkward reversal in the face of US resolve, it now risks snubbing Washington if the Israeli delegation ignores the Dec. 4 invitation and an international public relations disaster if the Arab parties are kept waiting at the peace table. Officials here conceded that Israel badly mishandled its response to the invitation. "We painted ourselves into a corner that it was hard to get out of," said the official. But he insisted that by questioning the US invitation, Israel had succeeded in sending Washington a message. "We want direct, bilateral talks with the Arab parties, without US intervention," the official said. "We want the Americans to be aware of that, and to publicly make it clear. "Straightforward talks with the Arabs are not possible in Washington," he argued. "We would always be under the eye of Big Brother." "The American government itself will make it impossible for the two sides ever to reach any agreement because the Arab countries will always say, 'Why should we make an effort if the American government is going to dictate to the Israeli government? Health Minister Ehud Olmert complained yesterday. This is an especially disturbing prospect to Israel, since on most of the key substantive issues under dispute, such as the principle of exchanging land for peace, the US position is closer to that of the Arabs than to Israel. As the Arab delegations prepared to set out for Washington, the Israelis were still seeking an understanding with the US that their talks with Lebanon, Syria, and Jordan and the Palestinians should be held in different buildings and at different times. Such an arrangement, officials here say, would make it clear that each set of talks is distinct, and not a continuation of the Madrid peace conference, which Israel saw as a ceremonial affair. Israel is also demanding that all following rounds of bilateral negotiations should be held in or close to the Middle East, and that the US intervene "only when the parties involved have genuinely exhausted all their possibilities," as one government official put it. Israeli fears that Washington is planning to play an activist role in the negotiations were heightened by the contents of the invitation to this week's talks, which is understood to have proposed certain topics for discussion. Though the text has not been released, it is reported to suggest that Israel begin withdrawing its surrogate forces from South Lebanon, beginning by handing over an area around the town of Jezzine to the Lebanese Army. The invitation is also said to call on Israel to propose a manner of pulling its forces out of the Golan Heights, an action the Israeli government has ruled out. These surprises only served to underline the Israelis' difficulty in coming to terms with the way that Washington is no longer doing the Jewish state many favors. Long used to a privileged relationship with the US, and convinced that Washington would clear important decisions with them beforehand, officials here were shocked to hear US State Department spokeswoman Margaret Tutwiler describe Israel's reservations over the peace talks last week as "childish." One of the messages Israel wanted to send to Washington by turning down its unexpected invitation was that "we must stay in close and continuing contact with the Americans on all issues," the official said. Meanwhile, when the talks do start, Palestinian delegates say they will insist that Israel freeze all settlement activity in the occupied territories before they talk about any other aspects of a transfer of authority. Since territorial arrangements are to be negotiated only later, the Palestinians argue that in the meantime no one should take any unilateral territorial action, such as building settlements or confiscating land. "We are not going to proceed to any other point on the agenda until we reach a solution that stops the settlements," says Palestinian delegation member Ghassan al-Khattib. The firmness with which he makes the point lends credence to the Israelis' fears about the direction the peace process is likely to take. "Our position on this [a settlement freeze] is strong, mainly because it is supported by different means of pressure by the United States," says Mr. Khattib. "All we have to do is be consistent with the bases laid down by the co-sponsors of the peace conference and by the international community."