In a turnabout that could improve prospects for an eventual settlement of the Arab-Israeli conflict, Saudi Arabia and five other moderate Arab nations have agreed to take part in a Middle East peace conference, a Saudi diplomatic source said Friday.

The agreement by the members of the Gulf Cooperation Council is expected to be announced Saturday in Luxembourg and is timed to coincide with a new Middle East diplomatic tour begun Friday night by Secretary of State James A. Baker III.In addition to Saudi Arabia, the members of the council are Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman.

A Bush administration official, while not confirming the development, said participation in a peace conference has been under renewed, private discussion between the United States and Saudi Arabia despite the Saudis' seeming opposition.

"The initial indications from the Saudis were that they were in favor" of the plan, said the official, who spoke on condition of anonymity. The decision by the Gulf Cooperation Council members would reverse what had been seen as a possibly fatal blow to Baker's peace formula. When he visited Saudi Arabia on April 21, Baker was told by the Saudis to count them out of any regional peace conference involving Israel and other Arab countries.

Despite the more conciliatory stand to be announced Saturday, Saudi Arabia and the five other members of the council are expected to impose key limits on the role they will play in a peace conference: The individual countries will send representatives to meetings on specific topics, such as arms control or water pollution. But they will be represented only by the council's secretary general, Abdullah Bishara of Kuwait, at the broad, opening session of the peace talks rather than by their own national representatives.

The arrangement appears to be carefully crafted to satisfy the United States and Israel without alienating those holding more hard-line Arab sentiments. While Saudi Arabia and the other council members legitimately can claim to be participating in the peace conference, their government officials will be conspicuously absent when the politically explosive subject of a possible Arab-Israeli settlement is broached in the general session.

Despite the conditions, said the Saudi diplomatic source, "the goal is to get the peace process moving."

Thus, as Baker begins his fourth journey to the region in two months, he will be able to dangle the carrot of Saudi participation in front of the Israelis in an effort to win concessions on their part.

It is not clear whether the formula being advanced by Saudi Arabia and the other members of the council would satisfy Israel, which would like to engage in direct, bilateral relations with Saudi Arabia and other estranged Arab neighbors. Egypt is alone among Arab states in maintaining diplomatic relations with Israel.

Baker has been shuttling between Washington, Arab capitals and Israel in an effort to take advantage of the regional alliance formed during the Persian Gulf war and move toward a broader cooperation involving Israel.

When Prince Saud al Faisal, the Saudi foreign minister, announced last month that his country was reluctant to take part in a peace conference - the centerpiece of Baker's Middle East effort - the appeal of a meeting was tarnished for Israel. The Israeli government had hoped to use the session as a forum for face-to-face talks with the major nations of the Arab world.


(Additional information) Mideast news

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- U.S. officials expressed disappointment over Iraq's refusal to allow the U.N. to police the area of northern Iraq occupied by Kurdish refugees.

- Jews who spent years in Soviet prisons were not enthusiastic about Soviet Foreign Minister Alexander Bessmertnykh's historic visit to Jerusalem. (See Page A3.)