Mideast Peace Talks in Second Day

Wednesday, July 12th 2000, 12:00 am

By: News On 6

THURMONT, Md. (AP) â€” Hoping to live up to the legacy of Camp David, President Clinton and the Israeli and Palestinian leaders are plunging into a second day of intensive negotiations in a backwoods setting whose informality belies the ``profound and wrenching'' questions at hand.

After breakfast Wednesday, Clinton was meeting with his own staff to map out the day's talks with Israeli Prime Minister Ehud Barak and Palestinian leader Yasser Arafat at the rustic presidential retreat where Egypt and Israel set themselves on a course for peace 22 years ago.

On the sidelines of the summit, Israel said it was calling off its sale of an advanced PHALCON airborne radar system to China, as the United States has been pressing it to do.

Israeli spokesman Gadi Baltiansky told reporters that ``there is no link between this and the summit.'' But the turnabout on the radar sale could be a sign that Israel was yielding on this point in order to strengthen its hand on other issues on the table at Camp David.

While the leaders remained secluded, Israel and the Palestinians each worked to put forth their case.

Speaking on CNN Wednesday, Palestinian spokeswoman Hanan Ashrawi said Israel was ignoring the plight of Palestinian refugees, hurting the atmosphere for talks.

``Shirking responsibility is not a good way to start (the summit),'' she said.

Israeli Cabinet minister Yuli Tamir, appearing on the same program, repeated Israel's rejection of Palestinian demands to establish a capital in the traditionally Arab eastern sector of Jerusalem.

``There will be no division of sovereignty over Jerusalem,'' said Tamir, the minister of immigration and absorption. ``Jerusalem will never be divided.''

The back porch of the presidential cabin served as the venue for separate talks that Clinton held Tuesday with Barak and Arafat. Afterward, all three leaders and their aides gathered for 30 minutes at a long rectangular conference table in a weathered cottage at the retreat.

Clinton held separate evening discussions with the two leaders, and all three delegations, about 40 people, dined together at round tables inside Laurel cabin, according to Clinton's chief spokesman, Joe Lockhart.

Occasional moments of lightheartedness, including some playful jostling by Barak and Arafat as they ushered each other into their initial meeting with Clinton, did little to dispel the sense of urgency and seriousness hanging over the gathering.

The two sides remain far apart on all the key issues as they approach a Sept. 13 deadline for arriving at a wide-ranging peace accord. Once the clock runs out on that, Palestinian plans to declare independence â€” with or without a peace treaty â€” raise the specter of violence.

Referring to the intractability of such disputes, Clinton spoke of the difficulties facing negotiators as he left the White House for Camp David.

``The two leaders face profound and wrenching questions,'' he said. In their quest to arrive at an agreement, he said, the two sides ``have passed the point of no return.''

Mindful of news leaks that have plagued Mideast summits in the past, the White House stressed that no information would be forthcoming about the substance of the talks.

Clinton, after his joint meeting with Barak and Arafat, parried reporters' questions by saying: ``We pledged to each other we would answer no questions and offer no comments, so I have to set a good example.''

The summit caps months of shuttling among the parties by Secretary of State Madeleine Albright and other mediators.

Heading into the talks, the Palestinians said they were pessimistic about whether gaps could be bridged, and Barak acknowledged the odds of success or failure were about equal.

Chief among the disagreements are the status of Jerusalem, which both sides claim as their capital, and the fate of several million Palestinians and their descendants who fled or were driven from their homes during Israel's 1948 war of independence.

Barak, who took office a year ago after being elected on a peace platform, has been badly weakened politically by attacks from rightist opponents who accuse him of being willing to make too many concessions to the Palestinians. Three parties pulled out of his governing coalition the day before he left for the summit, and early elections loom as a possibility, complicating peace efforts.

While no deadline for wrapping up the summit has been set, Clinton is scheduled to go to Japan on July 19 for an eight-nation economic summit.

There, an Israeli diplomat said, Clinton intends to appeal for financial help to assist Palestinian refugees and to implement any agreement he might reach with Barak and Arafat.