Arab leaders were reported today to have reached agreement on the principles of a joint Arab proposal for the Middle East, the first time the Arab world has ever united behind its own plan to bring peace to the region.
The plan basically is said to call for establishment of a Palestinian state and recognition by Israel of the Palestine Liberation Organization -- positions that have long been anathema to Israel.
The Arab leaders are expected to take their proposal to Washington and European capitals shortly for a formal presentation.
While there was still no official statement as of late tonight, conference sources and the Moroccan press said the 15 Arab chiefs of state or government and five other delegations assembled here together with Palestinian guerrilla chief Yasser Arafat had agreed early this morning on the basic principles of a plan.
As detailed in the first fragmentary reports available there appeared to be little likelihood that Israel would ever agree to negotiate on the basis of the Arab plan, thus requiring the United States to play the key role of broker in any new round of negotiations between the two sides.
Despite this, and the fact that the plan is not likely to please Washington altogether either, observers here saw it as a first important step toward an Arab readiness to begin negotiations for a final peace settlement involving at least implicit recognition of Israel.
The main points of the plan, already being described as the "Fez Charter," were said to be the following:
* Israeli evacuation of all territory occupied since 1967.
* Restoration of Palestinian rights, including establishment of a Palestinian state with Arab East Jerusalem as its capital.
* Guarantee of the rights of all religions to worship in Jerusalem.
* Recognition of the PLO as the sole legitimate representative of the Palestinian people.
* Guarantee of the sovereignty of all borders in the region.
Those points go far beyond President Reagan's proposals, which ruled out a Palestinian state and called for Palestinian self-government in association with Jordan. Reagan also proposed that Jerusalem remain undivided and that Israel's existence be explicitly recognized.
Basically, the Arab plan appears to be a reworking of the one submitted by Saudi Arabia's King Fahd to the first session of this summit last November and which caused it to break up in disarray. But the Fahd proposals did not include any reference to the PLO while it spoke of the right of "all states in the region" to live in peace.
This was widely interpreted to mean an implicit recognition of Israel and militant Arab states, led by Syria and Libya, refused to accept it.
The new Arab plan reflects Fahd's proposals, but it does not go as far as a separate plan previously put forward by Tunisia's Habib Bourguiba that would explicitly recognize Israel's existence. Recognition, however, appears implicit in the current plan's call for the guarantee of "all borders."
Israeli Prime Minister Menachem Begin earlier had denounced the Fahd plan as tantamount to calling for the destruction of the Jewish state and vowed never to negotiate on the basis of it.
Also, Israel has repeatedly said it will never allow the creation of an independent Palestinian state in those areas, will never recognize the PLO, will never return the occupied West Bank and that it intends to keep Jerusalem as its undivided capital.
Reports circulating here tonight said a five- or six-member committee of chiefs of state had been set up to take the summit proposals to Washington for discussions with the Reagan administration.
Arafat reportedly had been named a member of the committee, which could cause serious problems if he tried to go to Washington for talks because the United States has pledged not to deal with the PLO until it recognizes Israel.
The Arab leaders, who represent 20 of the Arab League's 22 members (Libya and Egypt are absent, Egypt having been suspended), continued their meeting late into the night. They were reported to be discussing the other main issues on the agenda such as the Iran-Iraq war and an Arab strategy toward Israel in the wake of the Israeli invasion of Lebanon. The summit is expected to end early Thursday morning.
Today, Moroccan King Hassan, who is host and chairman of the summit, held a royal banquet and festival for his guests at the airport grounds outside this imitation Swiss Alpine resort 35 miles south of Fez.
Thousands of Berber tribesmen riding colorfully decorated horses and camels raced across the mile-square festival grounds at full gallop shooting off flintlock muskets as they neared the royal tent where Arab leaders were lunching.
There were two extraordinarily rare scenes of Arab-world solidarity. First King Hassan loaded himself and the 14 other Arab leaders into the back of an Army Berliet truck, all of them sitting side by side or back to back on hard wooden seats.
The truck was then driven around the festival grounds which was lined with dancing and singing Berber tribesmen and ululating women.
On the green hillside behind the grounds, painted in huge white letters, were the words: "We shall pray in Jerusalem."
Following the tour, King Hassan and his guests sat down to a three-hour banquet under the sprawling white-and-black royal tent.
Seated together were Saudi Arabia's King Fahd, Jordan's King Hussein and King Hassan on one side and Iraqi President Saddam Hussein, Sheikh Jaber Sabah, the emir of Kuwait, and President Hafez Assad of Syria on the other.
Hassan and Assad on the one hand and Saddam Hussein and Assad on the other were previously hardly on speaking terms, so bitter are their respective inter-Arab feuds.