ARAB AFFAIRS - Aug 1 - Saudis Consider Diplomatic Engagement With Israel.

Saudi Arabia and Israel takes a tentative step toward diplomatic engagement, with the Saudi FM saying that his country will consider attending Pres Bush's planned Israeli-Palestinian peace conference in the autumn. Such a step would put Saudi officials at the same table as their Israeli counterparts for the first time since 1991. But Saudi officials said a precondition of Saudi attendance was that the conference tackle the big four "final status" issues, which have bedeviled peace negotiators since 1979: the fate of Palestinian refugees who left or were forced to leave their homes in Israel, the status of Jerusalem, the borders of a Palestinian state, and the dismantlement of Israeli settlements in the West Bank. "We are interested in a peace conference that deals with the substance of peace, not just form", the FM, Saud al-Faisal, said at a news conference in Jidda with Secretary of State Condoleezza Rice and Defense Secretary Robert Gates. "If it does so, it would be of great interest to Saudi Arabia". Israel's FM, Tzipi Livni, said in meetings with Rice that Israel welcomed the Saudi comments. But in a sign that the Saudi precondition might not be so easy to meet, Livni added that sometimes "it's not wise to put the most sensitive issues out first". Rice flew to Jerusalem after talks with the Saudis in Jidda. American officials traveling in the region with Rice and Gates took heart from Saud's remarks. "We interpret this as positive", a senior administration official traveling with Rice told reporters aboard her plane en route to Jerusalem. If Saudi officials do sit down to the table with Israel, it would be the first time the two adversaries have held public talks about Israeli-Palestinian peace since the Madrid conference that followed the Gulf War in 1991. Saudi Arabia has long eschewed diplomatic relations with Israel, although Saudi officials have also encouraged the Bush administration to push hard to resolve the Palestinian-Israeli peace issue. Saud also said that his country was considering opening an embassy in Baghdad and that he was "astonished" by recent criticism of its Saudi Iraq policy by a Bush administration official. Saud said he would send a diplomatic mission to Baghdad "to explore how we can start an embassy in Iraq", a step the Bush administration has long sought to add legitimacy to the government of PM Nuri Kamal al-Maliki. Saud gave little ground during the talks on an effort by the Bush administration to step up efforts to halt Saudis intent on joining the insurgency in Iraq from crossing the border or traveling through Syria. He said Saudi Arabia was already making efforts to halt its citizens from going to Iraq and raised the opposite concern - that terrorists were crossing into Saudi Arabia from Iraq. "All that we can do in order to protect the border in Iraq we have been doing", he said. "The traffic of terrorists is, I can assure you, more concerning to us coming from Iraq, and this is one of the worries our government has". The Bush administration's relations with the Saudis have been strained in recent months, and Zalmay Khalilzad, the US ambassador to the UN, said recently that some Arab allies of the US were undermining the American-led effort to stabilise Iraq and that Saudis in particular were "not doing all they can to help us". Senior administration officials have complained privately that Saudi Arabia and other Sunni Arab allies of the US have given support and financing to opponents of the Maliki government. Saudi officials have long had doubts about Maliki's government, considering it a largely pro-Shi'ite entity that does not look after the interests of Sunni Muslims and is providing Iran, a majority Shi'ite country, with a bridge to expand its influence in the region. Even so, Saud bluntly rejected Khalilzad's comments. "I was astonished by what he said, especially since we have never heard from him these criticisms when he was here". Before going to the UN, Khalilzad was ambassador to Iraq. The friction reflects the deep disagreement between Riyadh and Washington over the Maliki government, which Saudi officials say privately has not taken many of the steps, like passing a law distributing oil revenue, that it has promised to take to promote reconciliation between Sunnis and Shi'ites. American officials have also been frustrated at the slow pace of the Iraqi government, even with nearly 30,000 additional American troops on the ground. Gates acknowledged in recent days that the Saudis view Maliki's ties to fellow Shi'ites in Iran as giving Tehran a bridge to expand its power in the Middle East and possibly threaten the largely Sunni regimes, such as Saudi Arabia. Rice and Gates arrived in Saudi Arabia on an unusual joint visit for talks with King Abdullah and other senior officials. The main topics they aimed to pursue were a proposed arms package the Bush administration is offering the Saudis, the Arab-Israel peace process and stabilising Iraq. After the meeting, Gates flew on to Kuwait while Rice continued to Jerusalem. Rice welcomed the Saudi offer to explore establishing an Iraq embassy and said the visit had reaffirmed the Saudi-US ties. She has tried to play down Khalilzad's remarks and maintained that the relationship is strong enough to withstand such disagreements. "If there are problems we have with Saudi policies, we tell them", she said. "If the re are problems the Saudi have with us, we talk about it". The lavish banquet hosted by Abdullah night featured a buffet that stretched for twenty yards and featured an astonishing range of dishes, American official said. It took place on the second floor of the palace. Guests were seated so they could gaze upon a gigantic wall-size aquarium that included hundreds of fish and at least two eight-foot sharks that were themselves fed fish parts during the banquet as the diners watched.