Embittered by Egypt's new treaty demands and dismayed by Secretary of State Cyrus Vance's abrupt halt to shuttle diplomacy, Israeli officials tonight began looking to another summit conference as possibly the only hope for reviving the stalled Middle East peace negotiations.
Publicly, Israel's leaders attempted to minimize a crisis atmosphere and an apparent worsening of Israeli-U.S. relations, saying the talks were slowed but not hopelessly deadlocked. Privately, some officials said they were bracing for a barrage of hostile American public opinion as a result of Vance's abortive attempt to nail down final details of the peace treaty.
"As usual, we are going to be the villains, and the United States is going to stand behind Sadat," said one Israeli official, referring bitterly to new demands by Egyptian President Anwar Sadat that reportedly have been rejected by Prime Minister Menachem Begin.
Begin told reporters, "We shall continue our friendly discussions despite certain differences." But he is said to have complained bitterly in a meeting Wednesday with Vance that the United States is unfairly talking sides with Egypt, and that Sadat continues to advance new "blackmail" demands because he knows he can find U.S. support.
Begin, according to Cabinet sources, repeatedly asked Vance how the Unite States could in good conscience insist that Israel show more flexibility to the added Egyptian proposals when in mid-November it was exerting pressure on Israel to sign the U.S. proposed compromise draft treaty. On Nov. 21, the Israeli Cabinet voted to accept that compromise draft after first rejecting it.
The Cabinet scheduled an emergency session for Friday. But Begin and a majority of the ministers are known to be adamantly opposed to accepting many of the Egyptian proposals, which Vance carried here Wednesday as "new ideas" after a series of meetings in Cairo with Sadat.
Neither side has officially disclosed Egypt's proposals. But Israeli sources today gave this version of what Sadat is seeking:
An exchange of letters under which each side could ask for review and changes in military and security arrangements of the Egyptian-Israeli treaty. Israel does not object in principle to such a review, but does object to scheduling it in exactly five years, which coincides with implementation of full autonomy for Palestinians in the West Bank and Gaza Strip and smacks of a new form of treaty "linkage."
An exchange of additional letters in which both sides agree that if the separate Israeli-Egyptian treaty or the comprehensive West Bank-GrEgyptian treaty or the comprehensive West Bank-Gaza pact on Palestinian autonomy is not implemented, either of the parties could claim "nonimplementation" of the other treaty.
A letter that would affirm Egypt's mutual defense pacts with other Arab states and, according to the Israelis, water down a treaty provision that declares the Egyptian-Israeli pact supersedes other agreements between Egypt and Arab League states.
An Egyptian demand that full diplomatic relations, including an exchange of ambassadors, will occur only after Palestinian autonomy on the West Bank and Gaza Strip. The draft treaty provides for such an exchange nine months after the interim withdrawal of Israeli forces from the Sinai Peninsula.
A target of December 1979 for holding elections for self-governing councils in the West Bank and Gaz.
All the revised or new Egyptian proposals, Israeli sources said, have been endorsed by U.S. negotiators Officials here view this as a form of encouragement for Egypt to adopt an inflexible stand during upcoming talks.
In announcing Friday's Cabinet session, the government pointedly said minister's would discuss the negotiations and "take decisions." This led to speculation that Begin may seek to reject formally the Egyptian proposals, or even ask for a "cooling off" period before talks are resumed.
What appears certain is that the Dec 17 deadline set at Camp David will not be met. Israeli Foreign Minister Moshe Dayan conceded as much at Ben-Gurion Airport today when, on Vance's departure, he said, "I wouldn't speak about dates, but about sustance . . . I wouldn't bind myself to a timetable." However, Dayan added, "I am sure we will find a way to go ahead with the peace process."
An additional irritant was injected into U.S. Israeli relations today when Vance, accompanied by U.S. consul General Michael Newlin. made an impromptu automobile tour of part of the West Bank and briefly visited an Arab village that has been the object of controversy over alleged illegal seizure of Palestinian land by Israel's military occupationgovernment.
Although U.S. officials here denied it, sources in the Israeli military governors office in Bethlehem confirmed that Vance and Newlin drove to Beit Sahul, a village of 7,000 just outside Bethlehem, immediately after Vance paid a visit to the Church of the Nativity in Bethlehem.
Israeli officials complained that they were not advised of the trip in advance.
Earlier this week, the military governor's office issured an order freezing Arab construction on about 300 acres of privately owned land in Beit Sahur. On Wednesday, Palestinians there complained to reporters that freezing construction was the first step in annexing the land for eventual use for Israeli settlements or military construction.
Beit Shur residents said they would appeal the order to Israel's upreme court and protested by sending telegrams to Newlin and Vance, who was staying at the King David Hotel in Jerusalem.
A spokesman for the military governor's office said the site adjoins a military installation and that banning construction near army facilities is routine procedure.
Newlin denied that Vance had made an inspection of the controversial site and stressed that the purpose of the secretary's "unofficial" trip to the West Bank was to visit the Church of Vance, with extra time available, had been driven to the nearby Shepherd's Field, which is near Beit Sahur.
Vance, according to U.S. officials, did not talk with any Aplestinians during the trip. CAPTION: Picture, Cyrus Vance, right, ends talks Israel with handshake with Menachem Begin as Moshe Dayan looks on. AP