ARAB LEADERS URGE ISRAEL TO KEEP PLAN OF `LAND-FOR-PEACE'.

Byline: Associated Press 

Arab leaders will appeal to Israel in their weekend summit to ``save the peace process'' by dropping policies that deviate from the land-for-peace formula accepted by both sides for negotiations.

Egyptian Foreign Minister Amr Moussa outlined the view after meeting Friday with fellow Arab foreign ministers to draft the communique to be issued by the 21 Arab leaders meeting here today and Sunday.

Moussa said the announced policies of new Israeli Prime Minister Benjamin Netanyahu threaten the peace process. The Arab summit would send a ``clear-cut and prudent'' message to Israel and the international community as the sponsor of Arab-Israeli talks, he added.

``There will be no messages of threats or warning,'' he said. ``But what I am saying is that it takes two parties to establish and save the peace process.''

The first Arab summit in six years was called by Egypt, Syria and Saudi Arabia after the May 29 election of the hard-line Netanyahu.

In Jerusalem, meanwhile, Israel's new foreign minister said he would not rule out territorial compromise on the Golan Heights in exchange for peace with Syria. The future of the Golan is one of the central issues in Middle East peace negotiations.

David Levy's statements contrasted with those from Netanyahu, who recently said he opposed returning the Golan.

Insisting peace remained Israel's highest priority, Levy said Israel's new government also planned to meet with Palestinian leader Yasser Arafat.

At least 13 heads of state will attend the weekend Arab summit, along with princes and prime ministers. In addition to adopting a stand on Israel, they will have to deal with other prickly issues, chiefly divisions over Iraq.

Iraq was not invited to the meeting because of continued anger among oil-rich Persian Gulf states over the 1990 Iraqi invasion of Kuwait.

Egyptian President Hosni Mubarak said ``psychological obstacles'' also divide the leaders. He said he hoped to arrange a meeting between Jordan, which has made full peace with Israel, and Syria, which is the most recalcitrant negotiator with the Jewish state.

Mubarak made a largely symbolic effort Friday to solve his own country's dispute with neighboring Sudan, which Egypt accuses of stirring up Egyptian Muslim militants.

The Egyptian leader went to Cairo's airport to greet Sudanese President Omar el-Bashir. Mubarak, wearing a business suit, and el-Bashir, in Arab robes and a billowing turban, looked like they were from two different worlds as they walked together.

Speaking on Egyptian television earlier, Mubarak said that reports that the summit would castigate Israel were not correct. ``It is not against Israel,'' he said.

However, Arab leaders have grown increasingly worried as Netanyahu's government has issued policy guidelines that depart from those of his predecessor, Shimon Peres. In addition his statements on the Golan, Netanyahu said he would not permit the establishment of a Palestinian state.

The guidelines also state Netanyahu's unwillingness to discuss Arab east Jerusalem, which the Palestinians want as their future capital.

Referring to Netanyahu, Moussa said: ``We would like him to reconsider his guidelines and documents, which are upsetting and threatening the peace process and all of us.''

A draft copy of the summit communique, obtained by the Associated Press, reaffirms the Arab commitment to peace and urges Israel to do the same without delay.

It also calls for Israel to withdraw from the Golan and East Jerusalem, which were seized by Israel in the 1967 Mideast War, as well as southern Lebanon.

Speaking on Israel's Channel Two television Friday, Levy sounded conciliatory, saying, ``If the peace serves both sides and it is in their supreme interests, then they will speak and they will meet in the middle.''

Asked if he was leaving open the possibility of territorial compromise on the Golan, he said, ``To some extent and on the condition that we achieve peace.''

Moussa said the peace talks should resume on the basis that Israel would leave occupied Arab land in exchange for peace, the principle embodied in U.N. Security Council Resolution 242 and accepted by the Madrid conference that began the peace process almost five years ago.

Moussa's moderate tone follows pleas by the United States that the Arabs not reject Netanyahu as a peace partner.

Levy on Friday criticized Arab nations for rushing to early conclusions about the new Israeli government's readiness to talk peace with Arab countries, adding that extreme statements would not serve either side.

``We want open dialogue on every front. We want peace with Syria (and) . . . with the Palestinians,'' Levy said.

For his part, Netanyahu has sought to reassure the Arabs by urging the resumption of talks without ``pre-conditions,'' but Arab officials and newspapers have accused Netanyahu of hypocrisy. They say Netanyahu himself sets conditions on the Golan and Jerusalem in his policy guidelines.

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Photo: Egyptian President Hosni Mubarak, left, greets KingHussein of Jordan Friday in Cairo, before this weekend's Arab summit.

Associated Press