The action in the Middle East talks shifted to Cairo and Jerusalem yesterday as senior Egyptian and Israeli negotiators returned home for consultations on a U.S. proposal for overcoming the main obstacle to a peace treaty.
In the wake of new U.S. efforts to break the impasse, Egyptian President Anwar Sadat's government recalled acting Foreign Minister Boutros Ghati, and Israeti Foreign Minister Moshe Dayan left Washington to attend a meeting Thursday of Prime Minister Menachem Begin's cabinet.
Their departures put the US-mediated talks into a temporary mark-time phase in respect to what has become the key unresolved issue - linking an Egyptian-Israel peace to further negotiations on the status of the Israeli-occupied West Bank and Gaza Strip and their Palestinian inhabitants.
However, all parties went out of their way to emphasize that the talks are not being suspended or were on the verge of breakdown. Rumors of serious trouble had been fanned early yesterday by a press report from Cairo that Egypt had decided to break off the negotiations.
But that report was later denied by the Egyptian delegation here, and George Sherman, a State Department press officer serving as spokesman for the talks, said both Egypt and Israel are actively considering the compromise suggested by Secretary of State Cyrus R. Vance.
Sherman also said on behalf of the United States: "We urge flexibility by both governments in handling the issue."
Progress in the negotiations has been slowed considerably by conflicting Israeli and Egyptian attitudes on how to handle the question of linkage between their peace treaty and a commitment to negotiate further on the West Bank and Gaza Strip questions.
Sadat, who is sensitive to pressure from the rest of the Arab world about not abandoning the rights of the Palestinians, wants the treaty to contain an explicit reference to the need for further negotiations on a comprehensive Middle East settlement. Such a reference would cover the West Bank and Gaza Strip.
However, Israel, citing the Camp David agreements to treat these issues separately, has been seeking to exclude or water down the so-called linkage language in the treaty.
Details of the latest U.S. compromise proposal have not been revealed. But they are understood to involve proposed new wording about a comprehensive settlement that would be included both in the treaty's preamble and in an exchange of letters between Egypt and Israel that would accompany the treaty.
In an effort to unravel the snarl caused by the linkage dispute, President Carter telephoned both Begin and Sadat over the weekend. Vance also went to New York Sunday night for a hurried talk with Begin before the Israeli leader returned home from a private visit to the United States and Canada.
It was not immediately clear, though, whether this latest emergetic U.S. intervention would have the desired effect on the Begin government, whose hard-line members are strongly opposed to explicit commitments on negotiations about the West Bank or on Sadat, who has shown increasing impatience over alleged Israeli intransigence.
That was acknowledged yesterday by White House press secretary Jody Powell who said the effectiveness of Carter's intervention "remains to be seen." Powell added that the president's calls to the two leaders was solely "to discuss the issues" and had not involved any attempt to pressure them into accepting the U.S. compromise plan.
The only thing certain was that the American proposal was causing a great deal of high-level activity in both Egypt and Israel. Before announcing Ghali's recall for consultations. Sadat conferred for hours with ranking members of his government and also met with U.S. Ambassador Hermann Eilts.
In Israel, Begin said on his arrival yesterday that, while "problems remained," he does not consider the talks to be stalemated at this time. In regard to the U.S. compromise, Begin said the cabinet will begin considering the proposal at its Thursday meeting and act on it this week.
One surprising note was that only Dayan went back to Jerusalem for the cabinet session. Originally, the co-leader of the Israeli negotiating team, Defense Minister Ezer Weirman, was supposed to accompany him.
Instead, Weirman remained in Washington, as did the other leader of the Egyptian delegation, Defense Minister Kamal Hassan Ali. Sources connected with the talks said they would continue to negotiate on other aspects of the treaty while the linkage issue was being discussed in Cairo and Jerusalem.
In a related development yesterday, Sherman denied that Carter had given any secret commitments to Sadat on the future status of East Jerusalem, which Israel has controlled ever since it wrested the Arab part of the city from Jordan in the 1967 Middle East war.
The question of secret commitments was prompted by an interview given to The New York Times by King Hassan of Morocco. Hassan said Sadat had told him of promises by Carter to return East Jerusalem to Arab control and to bring about the independence of the West Bank and Gaza Strip.
In response, Sherman said Carter had made "on secret commitments" to Sadat at Camp David or on other occassions. In respect to the West Bank and the Gaza Strip. Sherman, while noting that the Camp David accords call for negotiations over these areas, emphasized that the United States does not intend "to prejudge the outcome of the negotiations."
Washington Post Staff correspondents Thomas W. Lippman in Cairo and William Claiborne in Jerusalem contributed to this article.