MEETINGS TARGET CONFIDENCE IN PEACE.

Byline: Steven Erlanger The New York Times

As Prime Minister Benjamin Netanyahu of Israel met with King Hussein of Jordan here to discuss eroding confidence in the Middle East peace effort, President Clinton prepared on Sunday to push Netanyahu to make good on his promises to improve the lives of Palestinians.

Clinton and Netanyahu will meet in Washington, D.C., today in a hastily arranged effort to stem the rising distrust between Palestinians and Israelis. One proposal is to construct new Arab housing in East Jerusalem. Nearly three weeks of demonstrations and violence have followed the Israeli decision - despite American opposition - to build new Jewish housing in mostly Arab East Jerusalem, at a place the Palestinians call Jabal Abu Ghneim and the Israelis, Har Homa.

Netanyahu has proposed breaking the cycle of violence by moving directly to intensive negotiations with Yasser Arafat, the Palestinian leader, on the final political status of Jerusalem and the Palestinian Authority, and he was to discuss that proposal with Hussein, recuperating here after a prostate operation at the Mayo Clinic on Saturday.

But Clinton, partly on the advice of the king, is leaning away from dramatic gestures, fearing that if any proposals are not well prepared they will fail, causing further damage, senior American officials say. ``Right now we're looking at more short-term confidence-builders,'' an official said. ``We've got to get Netanyahu and Arafat talking again.''

The Americans also want to know if Netanyahu, who leads the conservative Likud Party, is serious about trying to form a government of national unity with the Labor Party, as he has sometimes suggested. Netanyahu has lost popularity in Israel, and a unity government would be better able to negotiate and ratify a final settlement with the Palestinians that could give them a limited form of statehood and a capital in part of Jerusalem.

``I wouldn't rule out something dramatic, like a Camp David summit, down the road,'' a senior American official said. ``Obviously our position would be different if there's a unity government. But what is vital now is to restore confidence on both sides - so that the Israelis feel safe from terrorism and the Palestinians feel there are visible benefits from the peace process.''

To help restore confidence quickly, Clinton will push Netanyahu to announce and begin the construction of Arab housing alongside the new Jewish housing in East Jerusalem, American officials said. Netanyahu has said he will not stop construction despite American pressure.

So the Americans, despite their view that changes to Jerusalem should be a part of the final-status talks, do not expect Netanyahu to reverse himself, as he also refused to do in September when the Israelis opened an archeological tunnel near a major Islamic holy site in the Old City, setting off deadly clashes that killed some 80 Palestinians and 15 Israelis.

But the Americans want at least a private promise to avoid construction on disputed land during peace talks. On Saturday, Arafat demanded that Netanyahu stop ``the Judaization of Jerusalem'' by unilateral construction of settlements. He has sent Hanan Ashrawi, a well-known Palestinian official, to Washington to consult with American officials.

Clinton will also push Netanyahu to make good quickly on other confidence-building measures listed as part of the Hebron accords. Those include opening the airport in Gaza so Palestinians can travel abroad without going to Israel or Jordan; safe passage between Gaza and the West Bank; access to port installations for faster transit of goods; a loosening of restrictions to allow greater economic activity in the Palestinian Authority, and more permits for Palestinians to travel to jobs in Israel.

Clinton is also pressing Arafat to forswear violence and terrorism and to resume security cooperation with Israel, to build up Israeli confidence shaken by the renewal of suicide bombings.

Israeli officials say Netanyahu wants Arafat to make an absolute commitment to stop violence if peace talks are to resume. Netanyahu has charged that Arafat gave ``a green light'' to the militant Palestinians of Hamas to use suicide bombers against the Israelis in response to the Har Homa decision.