ARAB and Israeli negotiators finally arrived at the bargaining table this week, weighted down by the baggage of their bitter, 43-year conflict.As bilateral talks began Tuesday in Washington, representatives of Israel and its immediate Arab neighbors announced that they were ready to get down to the serious business of peacemaking, including negotiating self-rule for Palestinians living in the Israeli-occupied West Bank and Gaza Strip. But with procedural maneuvering and charges of bad faith emanating from both sides, the mood has been anything but peace-like. Conflicting objectives are already proving hard to reconcile. Israel's talks with Syria got off to the most promising start as Syria's chief delegate spoke of "peace" with Israel instead of the usual "coexistence" Syria has offered before. But unless Syria agrees to a formal peace treaty, and unless Israel agrees to talk about relinquishing the Golan Heights, the negotiations are unlikely to progress, diplomatic sources here say. The most important of the three sets of talks failed even to begin Tuesday as Palestinians demanded the right to negotiate with Israel independent of their Jordanian counterparts. Behind the maneuver is an attempt by Palestinians to establish themselves, symbolically at least, as a separate Arab nation - which is precisely why Israel has refused to go along. "They're trying to press through procedure their claim to statehood," Israeli spokesman Benjamin Netanyahu said. Meanwhile, Israel has also sought to use procedure to make a substantive point. It is pressing to move the talks from Washington and proposes alternating the negotiations between Arab and Israeli cities. Any meetings in Israel would confer indirect Arab recognition on the Jewish state. "Once we create the fact of Syrians being inside Israel and Israelis being inside Syria, the normalization process begins," says an official attached to the Israeli delegation. The parties may eventually settle for a neutral site such as the Mediterranean islands of Cyprus or Rhodes, if and when procedural problems are finally resolved. The bilateral talks began five weeks after the peace process was launched in ceremonies in Madrid. The third phase of the process, multilateral talks on regional issues, is due to begin in Moscow in January. For Israel, the main object of peace talks is formal treaties with Syria, Lebanon, and Jordan. For the Arabs, the objective is land now occupied by Israel. Arab spokespersons warned this week that peace talks will prove futile unless Israel agrees to stop building Jewish settlements in the West Bank . "If settlements continue, there will be nothing to negotiate about," says an Arab delegate to the talks. The Bush administration has condemned the settlements and, early next year, will probably try to force Israel to halt new construction as a precondition to granting $10 billion in loan guarantees requested by Israel to help absorb Soviet immigrants. So important are the settlements to Israel, says one Israeli source, that Prime Minister Yitzhak Shamir may be willing to forego the guarantees for now an d urge greater sacrifices at home to help absorb the new arrivals.