The slowly blossoming relationship between Israel and the Soviet Union offers rewards for both nations despite fundamental disagreements over the Palestine Liberation Organization and the Middle East peace process.

For Israel, Foreign Minister Moshe Arens' talks with his Soviet counterpart, Eduard Shevardnadze, in Cairo Wednesday was another step toward the goal of renewing relations that Moscow broke during the 1967 Arab-Israeli war.The Soviet Union, with close ties to most Arab nations, could have a moderating influence in future Middle East peace negotiations.

For its part, the Kremlin needs relations with Israel to become a player in the peace process that has been dominated for years by the United States.

During the past 18 months, the atmosphere has slowly warmed, but the Cairo meeting, which Shevardnadze requested, was the highest-visibility session between the two sides.

Israeli officials said the mere fact of the meeting was the important thing, rather than the expected differences over Soviet calls for talks with the PLO and an international peace conference on the Middle East. The two ministers laid out their contradictory positions and essentially agreed to disagree.

Israel also regards the location of the meeting in Cairo as an indirect acknowledgment of the U.S.-brokered 1979 Egyptian-Israeli peace treaty and the Camp David accords, which Prime Minister Yitzhak Shamir regards as the basis for an overall Arab-Israeli settlement.

Shevardnadze's 11-day trip to the Middle East, the first by a Soviet foreign minister in 15 years, comes at an opportune time for Moscow, even though he brought no new proposals. It gives the impression of Soviet momentum in the area while U.S. policy is in a vacuum because of the change in administrations.

So far, President Bush has not indicated any fresh approach to the region's long-festering problems.

Shevardnadze's visit to Egypt, Jordan, Syria, Iraq and Iran also shows that the Soviet Union is no longer anathema in the Islamic world now that it has completed its withdrawal of troops from Afghanistan, also a Moslem nation.

In a rare show of unity, the main Arab parties in the Middle East welcomed the more active Soviet role in the region, UPI correspondent Rawhi Abeidoh reported from Abu Dhabi.

Some Arab officials hope that a friendly superpower would balance what they perceive as Washington's biased policy in favor of Israel and engage the hesitant U.S. administration in the Middle East peace process.

Shevardnadze has won the support of Syria, Egypt, Jordan and the PLO for the international conference, but Israel still rejects such a meeting or any contacts with the PLO.

A year ago, the Soviet Union seemed more eager for a resumption of relations so it could become a player in the region. Now, ironically, the impetus is mainly coming from Israel, which is feeling more isolated because of the 14-month-old Palestinian uprising in the Israeli-occupied West Bank and Gaza Strip.