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Summit Endorses U.S. Mideast Peace Initiative : Diplomacy: Group of Seven urges Israel to halt new settlements, calls on Arabs to end their boycott.


LONDON — Leaders of the major industrial democracies, declaring the new U.S. peace initiative in the Middle East a matter of "overriding importance," called Tuesday for suspension of both the Arab economic boycott against Israel and the Israeli policy of building settlements in the occupied territories.

In a firm endorsement of the American plan for opening Arab-Israeli peace talks, which Secretary of State James A. Baker III will promote in a whirlwind tour of the Mideast beginning Thursday, leaders attending the economic summit said it "offers the best hope of progress toward a settlement."

American officials are counting on the positive response Syrian President Hafez Assad has given to the U.S. plan to put pressure on Israel to compromise and thus open opportunities for moving toward direct talks between the two sides.

Although Bush and Baker have hailed Assad's letter as positive and a breakthrough in the long-running attempts to bring peace to the region, officials in Jerusalem have dismissed it as a ploy to pin blame on Israel for the failure of the peace process. And they have said they continue to oppose the American plan.

Baker will first visit Syria, then three other Arab countries--Jordan, Egypt and Saudi Arabia--before winding up his trip in Israel. The itinerary was planned that way to try to forge Arab unity and bring international pressure on Israel to be more receptive when Baker arrives.

"To the extent (Baker) is able to bring the Arabs together, there will be a major source of pressure on Israel it has never faced before," said a senior Administration official who declined to be identified.

The summit leaders took up the Mideast question in a political declaration that also endorsed continuing economic sanctions against Iraq, called for strengthening the United Nations' hand in dealing with crises and addressed several other subjects.

They urged that all parties to the Arab-Israeli dispute adopt "reciprocal and balanced confidence-building measures" and show "the flexibility necessary to allow a peace conference to be convened on the basis set out in this initiative."

"In that connection," the statement continued, the Arab boycott against Israeli products and companies doing business in Israel should be suspended, "along with the Israeli policy of building settlements in the occupied territories."

The so-called G-7 leaders--representing the United States, Britain, Germany, France, Italy, Japan and Canada--specifically endorsed the "concept of a (Mideast) peace conference starting parallel and direct negotiations between Israel and representative Palestinians on the one hand and Israel and the Arab states on the other," as called for in the American peace proposal.

The U.S. proposal would provide for a general peace conference between Israel and its Arab neighbors that would be held under American and Soviet auspices, with the United Nations as a silent observer. After the general conference, Israel would be expected to hold bilateral talks with each of the Arab countries and with representatives of the Palestinians.

Israeli officials reacted coolly to the proposal to link a halt to the settlements to an end to the Arab boycott. "There is no connection between the two things," said a statement issued by Prime Minister Yitzhak Shamir's office.

"The problem of settlements is very complex and belongs to the type of problems which will be raised and discussed when the negotiations between Israel and the Arab states open," the statement continued.

In any event, Israeli officials said, to stop the building of settlements before peace talks would make the results of negotiations a foregone conclusion. Israel would be giving up land without getting to offer its own proposals. The Shamir government wants to offer limited self-government to the Palestinians who live there while keeping control of the West Bank and Gaza.

The Shamir statement went on to call for the Arabs to unilaterally end the boycott--which provides for blacklisting of companies that deal with Israel--and for other countries to resist the boycott by forbidding firms to adhere to it.

Expansionists in the Shamir government fear that peace talks will put an end to the stepped-up settlement program. Housing Minister Ariel Sharon has put into operation plans to construct 15,000 houses in the disputed land in the next two years. Shamir himself has called the settlement program unstoppable.

Baker, during his previous visits to Israel, proposed that Israel stop developing settlements as a confidence-building measure. He was answered with the sprouting of new communities, additions to old settlements and land seizures meant to lay the groundwork for future construction.

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