Baker Hails Israeli Plan to Reduce Settlements : Mideast: The secretary, winding up talks in Cairo, says Rabin pledges ‘severe’ cuts in construction.

CAIRO — In his most positive assessment since his latest round of Middle East diplomacy began, Secretary of State James A. Baker III said Wednesday that Israel has pledged “severe and substantial reductions” in Jewish settlement building in the occupied West Bank and Gaza Strip.

Baker, concluding talks with Egyptian President Hosni Mubarak before flying off to Syria, said Israeli Prime Minister Yitzhak Rabin has affirmed that construction of new settlements in the territories, the most controversial issue blocking talks between Arabs and Israelis, will be substantially curtailed by his new government.

“The discussions that I’ve had with Prime Minister Rabin have satisfied me that there are going to be severe and substantial reductions and curtailment of settlement activities by Israel,” said Baker, who indicated that final details of an agreement on settlements would be resolved after Rabin meets with President Bush next month.

“Let me say that I am really, as I have indicated, very satisfied in the philosophy and orientation of this new government in Israel toward the question of settlements,” he said. “All of the details have not been worked out. Some have. Many have. We are having ongoing discussions, so I’m not going to say any more than that there really is a new approach to this whole question of settlements by this new government, and it’s one frankly that pleases the United States, because as you know, we think settlements are an obstacle to peace.”

Indeed, Arab officials have made it clear that they will not be prepared to make substantial new concessions toward peace agreements with Israel, including such measures as an end to the economic boycott against Israel, until the Israeli government moves to end new Jewish settlement building.

Mubarak, who met with Rabin on Tuesday, said he has not discussed “details” with him. The temporary settlement freeze now in place, Mubarak said, is “a very good step forward in the right direction,” but not enough.

“What’s being offered still needs much more, so as to persuade the Arab countries to move quickly and move much more vigorously in the peace process,” he said.

Rabin has said he is opposed to “political” settlements in Arab population centers but remains committed to settlements in areas deemed vital to Israel’s security. But sources familiar with the talks said that Israel, while not willing to compromise on security issues, has indicated that it is prepared to be “pragmatic” in a wide range of areas. Israelis, the sources said, are encouraging the Arabs to watch Rabin’s actions but not to expect him to make broad statements that might spark controversy at home for his new government.

In Amman, a senior Jordanian official told reporters that Baker said during his talks with King Hussein on Wednesday that Israel is willing to freeze settlements in exchange for loan guarantees for new housing construction from the United States, currently blocked because of the dispute over settlements.

Israel Radio reported Wednesday that it is likely that Rabin’s government will recommend completion of about 11,500 houses currently under construction in the occupied territories and cancel approval for an additional 8,500 units for which contracts have not been signed.

Baker said U.S. officials are still having discussions with Israel over the issue of the loan guarantees and said those discussions would continue with Rabin’s meeting with Bush next month.

After his talks with Mubarak, which included a working lunch at the presidential palace, Baker returned to Syria for talks with President Hafez Assad, his contacts there having been cut short Tuesday by the death of Assad’s mother.

It is in Syria that Baker has his biggest job, convincing the Syrians that the new Rabin government is serious about making peace with all the Arab states.

Based on Rabin’s statements since his new Labor government was elected, Syria fears that Israel does not intend to discuss withdrawal from the Golan Heights, Syrian territory occupied during the 1967 Arab-Israeli War.

Egyptian officials hope they can use assurances gained in the week’s talks to reassure the Syrians during an Arab strategy planning session scheduled to begin Friday in Damascus.