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While the public pro- nouncements of Israeli leaders in the days leading up to the meeting had sought to reduce the level of expecta- tion, there was considerable private speculation that Shevardnadze would use the occasion of this high-profile showcase encounter to an- nounce a resumption of diplomatic relations with Israel. Disappointment that it did not materialize was given ex- pression by the mass- circulation Hebrew-language daily Hadashot, which noted in an editorial that Israel had already gone half way toward accommodating Soviet de- mands by accepting super- power, as opposed to U.N., auspices for peace talks. "The Soviets must now also go half way," said the paper, "and the first Soviet step down this road must be the renewal of diplomatic rela- tions." After the Cairo encounter, which was described as "a good, businesslike meeting," Israeli officials put a brave face on whatever frustration they may have felt. According to Arens, the talks helped to lay the foun- dations for possible future cooperation: "We have to find ways," he said, "of presenting our respective views, of creating a basis for under- standing, possibly a basis for peace." Shevardnadze, who declared himself "satisfied" with the "frank, open and honest dialogue," noted that "without goodwill on the part of Israel, there can be no solu- tion to this conflict." That, however, was only one aspect of the situation, he said: "Another aspect is that without the Soviet Union there can be no peace process. Therefore, continued dialogue is important." In somewhat less diplomatic terms, the Soviet Foreign Minister asserted that Israel did not have "even the semblance of a pretext" for refusing to negotiate with the PLO and bluntly warned that continued rejection of a role for the PLO might lead to international sanctions. "Israel could continue to make a point of refusing to talk to the Palestinians," he said. "But then it has to face the possibility that quite a few countries in the world will refuse to talk to Israel as well." While Arens restated Israel's objections to the idea of both an international peace conference under UN auspices and PLO participa- tion in any future peace negotiations, he emphasized the importance of continuing the dialogue with Moscow. "I think we are laying the foundations for an understan- Washington is hoping that the combined psychological effect of Moscow's tough line3 coupled with its own arms- length ptsture, will inject a note of chilly reality into the debate and contribute to a softening of Israel's hard-line positions. ding between our two coun- tries," he said. "I know it is important for Israel, I hope it is important for the Soviet Union and I think it is impor- tant for the progress towards peace in the Middle East." Despite that expression of cautious optimism, however, there is little doubt that the Israelis, while confident that relations will be restored sooner or later, were deeply disappointed that they returned empty-handed to Jerusalem. One clue to Moscow's foot- dragging might be found in the person of PLO leader Yassir Arafat, who arrived at the Soviet Embassy in Cairo, a pistol strapped osten- tatiously to his hip, for a meeting with Shevardnadze only hours after Arens had left. Israel was not, indeed, the only subject on the mind of the Soviet Foreign Minister; another equally intractable problem is the bitter personal animosity between Moscow's two key Middle East allies, Syria's President Hafez Assad and the PLO leader. Indeed, the first priority for the Soviet Union is to get its own act together in the Mid- dle East by engineering a rap- prochement between its clients, so that if and when peace talks got underway, the Arab side will at least be able