Hope for all-party return to Mid-East talks: US mediators see signs of progress along the road to peace, albeit 'millimetre by millimetre'

THE United States and Russia are awaiting responses from Israel and the Arab parties to their invitation to the next round of the Middle East peace negotiations starting in Washington on 30 August.

The Arab states - Syria, Jordan and Lebanon - and the Palestine Liberation Organisation (PLO) are due to meet this month to co-ordinate their reply. 'I think they'll all return - all of the parties,' Warren Christopher, the US Secretary of State, said in an interview on Cable News Network. 'The whole purpose of this process is to try to get to a more normal situation where they (the parties) can have normal relationships with each other,' Mr Christopher said.

State department officials held out little hope of a breakthrough at the talks. One spoke of grinding out progress 'millimetre by millimetre'.

If all the parties agree to attend, it will be a triumph for the diplomatic shuffle of Mr Christopher two weeks ago. When he planned his trip to the Middle East, he had hoped to discuss setting a date for the 11th round of peace talks. In the event, he had to cope with the fall-out from Israel's seven-day Operation Accountability in Lebanon. It has become increasingly clear, however, that Israel's action has done nothing to derail the peace talks. On the contrary, the deployment of the Lebanese army to the south, from where fighters of the Iranian-backed Hizbollah militia have mounted attacks on Israeli targets, may signal the beginnings of a more assertive Lebanese government presence in the south.

Meanwhile Israel yesterday paved the way for the first official Israeli- PLO contacts, by saying that Israeli officials would be able to hold talks with the Palestinian peace team from the occupied territories, which this week was publicly declared part of the Palestine Liberation Organisation.

'They are residents of the occupied territories - that is what we demand. They can call themselves by this name or that - it makes no difference,' commented one official.

However, the move breaks the taboo preventing official contacts with what in Israel is still a proscribed organisation. It follows increasing recognition in the Israeli government that it is time to talk to the real Palestinian leadership in the PLO if progress in the peace talks is to be achieved.

Benyamin Ben Eliezer, an Israeli cabinet minister, confidant of the Prime Minister, Yitzhak Rabin, and known by the Arab name 'Fuad' for his supposed pro-Arab feelings, acknowledged as much yesterday. 'Whether we like it or not the fact is that when we are talking to Faisal Husseini we are negotiating with a representative of the PLO - who is, was, and will continue to be a representative of the PLO,' he said.

Until now, Israel has refused to talk to the PLO, not so much because it regards it as a terrorist organisation but because it represents the entire Palestinian people, including those who left or were forced to leave what is now Israel, and not just the occupants of the West Bank and Gaza Strip.

Right-wingers wrung their hands at the news. Yossi Ben-Aharon, an adviser to the last government, said: 'To say what happened now in Tunis (PLO headquarters) has no importance and doesn't change a thing is simply . . . fraud.' He said once the PLO entered negotiations it would demand a homeland not only for the 2 million Palestinians in the occupied territories but also others - 'from Cincinnati to the Persian Gulf'.