A Bold New Plan by the Saudis

By William E. Smith.

Crown Prince Fahd speaks of Israel's right "to live in peace "

In the 2 1/2 years since the Camp David accords were signed by Egypt and Israel, negotiations for a wider Middle East settlement have remained deadlocked.

Now Saudi Arabia's Crown Prince Fahd has offered an alternative plan that, for the first time, places the Arab world's richest and most influential nation squarely on the side of a negotiated settlement between Israel and the Palestinians.

Fahd stated that Israel could "live in peace" with its Arab neighbors provided it permitted the Palestinian population of the Israeli-occupied West Bank and Gaza Strip to form an independent state. That condition alone made the proposal unacceptable to the Israeli government, but U.S. and European officials said that they hoped the Fahd initiative might be a first tentative step toward working out some solution to the dangerous impasse in the Middle East.

In an interview with the official Saudi Press Agency, Fahd called for: 1) Israeli withdrawal from all territory that it had occupied since the 1967 war; 2) removal of Israeli settlements in the West Bank and other occupied areas; 3) guarantees of freedom of worship for all religious groups within these areas; 4) recognition of the rights of 2 million Palestinian refugees -- from the 1948 war as well as the 1967 war -- for repatriation or compensation; 5) U.N. trusteeship over the West Bank and Gaza Strip during a transition period of several months; and 6) establishment of an independent Palestinian state, with the Arab eastern section of Jerusalem as its capital. Such an agreement, Fahd continued, should be guaranteed by the U.N. or by some of its members, presumably meaning the U.S.

More important, the agreement would assure the right of all states in the area to live with each other peacefully.

Differing with Egyptian President Anwar Sadat, who has staked his repu tation on the success of the Camp David peace process, Fahd branded that plan a failure and called on the U.S. to move on toward some broader form of discussion.

In company with most of the other Arab states, the Saudis had criticized the Camp David talks and condemned the Egyptian President for signing a peace treaty with Israel, which resulted in an agreement for the return of the occupied Sinai to Egyptian control. Fahd's latest remarks seemed to suggest that the Saudis might now be ready to take a more active and aggressive role in the search for peace.

To some extent, Western diplomats believe, the Fahd initiative is an expression of a rivalry of sorts between Saudi Arabia and Egypt for greater U.S. backing. Indeed, Sadat airily dismissed Fahd's proposals as "nothing new," although they obviously were more than that.

The Saudis maintain that they, and not the Egyptians, are America's leading partner in the Arab Middle East. They argue that they have tried to shape their oil policy and their diplomacy to help the U.S. Only last month, at Washington's urging, they helped persuade the Palestinians to accept a cease-fire in southern Lebanon. Sadat has been isolated from most of the Arab world, note the Saudis, while they are on influential terms with almost every Arab state. The Saudis believe they are in the best position to talk the Palestine Liberation Organization, the Syrians and the fractious Lebanese into working out a plan for peace.

And yet, complain the Saudis, when they seek Washington's help with their security problems they find it difficult to purchase American arms. The U.S. Congress has stalled for weeks on approving the Saudi request to buy five AW ACS (Airborne Warning and Control System) planes. Sadat, on the other hand, has received approval for 40 sophisticated F-16 jet fighters, and talks about needing as many as 150 more. The Saudis feel, quite simply, that the U.S. is not treating them fairly.

In Washington, the Reagan Administration was studiously noncommittal about the Fahd plan, reasoning that the proposal would get a better hearing in the Arab world if it were not endorsed by the U.S. Privately, however, many officials were encouraged by Fahd's statements.

Meanwhile, as part of the peace process, both Fahd and Sadat were urging the U.S. to overcome its reluctance to recognize and negotiate with the P.L.O. Last week Zbigniew Brzezinski, former President Jimmy Carter's National Security Adviser, said that the time had come for "some form of dialogue." Such a step, he said, would "encourage the P.L.O. to be more moderate and lead to its involvement in resolving the West Bank and Gaza Strip issues." Washing ton's standing policy for years has been that it will not deal with the P.L.O. until that organization recognizes Israel's right to exist.

In Western Europe, reaction to the Fahd plan was generally favorable. The British government called it "positive," the West Germans thought it "interesting," and French Foreign Minister Claude Cheysson declared that he attached "great importance" to the concept.

In the Middle East, reaction was predictably mixed. The P.L.O. was favorably impressed, despite the disapproval of some of its radical factions. If the P.L.O. should endorse the Saudi plan, it is unlikely that other Arab states would oppose it strongly, though some of the more radical, such as Libya, might publicly protest.

The new Cabinet of Prime Minister Menachem Begin quickly rejected the proposal, particularly objecting to the call for a Palestinian state. Privately, however, a number of Israeli officials acknowledged that the plan seemed to represent some changes in Saudi thinking. Deputy Prime Minister Simcha Ehrlich described the initiative as being "a turning point to a certain extent" Begin was on vacations and offered no commont on the Saudi proposal. But it is a safe guess that when he visits Washington on Sept. 9 he will emphasize to Ronald Reagan that he would prefer to stick to the Camp David format and bypass both the Saudis and the P.L.O. --By William E. Smith.

Reported by David Halevy/ Jerusalem and William Stewart/Beirut

With reporting by David Halevy, William Stewart

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