CAIRO, JULY 3 -- The foreign ministers of Iran and Iraq, who have refused to speak directly with each other since their countries signed a cease-fire agreement nearly two years ago, today met for talks in Geneva.

The brief meeting between Iraqi Foreign Minister Tariq Aziz and his Iranian counterpart, Ali Akbar Velayati, is the most significant indication so far that the two neighbors have launched a serious effort to draw up a peace treaty ending their eight-year-long war.

"It is in some way a psychological breakthrough," said United Nations Secretary General Javier Perez de Cuellar, who sponsored the meeting. Since their August 1988 cease-fire, Perez de Cuellar had been unable get the two sides to implement the truce's provisions for negotiations.

Today's highly publicized meeting followed an exchange of letters between Iraqi President Saddam Hussein and Iranian President Ali Akbar Hashemi Rafsanjani, in which a meeting between the two was discussed. Rafsanjani has indicated interest in the idea, first put forth by Saddam Hussein.

The meeting today also was preceded by secret diplomatic contacts between the two countries, according to an Iraqi official. In an interview in Baghdad June 24, Iraqi Foreign Ministry Undersecretary Nizar Hamdoon said Iran and Iraq "have established {direct} diplomatic contacts, which is significant." He declined at that time to elaborate on the contacts.

Hamdoon indicated that his government views the proposed presidential summit as aimed at a comprehensive settlement.

"What is the purpose of a summit meeting if not to discuss all outstanding issues, strike a deal and complete a package?" Hamdoon said.

Asked whether Iraq was prepared to compromise on its claim of sovereignty over the disputed Shatt al Arab waterway between the two countries, Hamdoon said: "I don't think it's advisable at this point to complicate the issue by putting preconditions on the meeting.

"This is the essence of our position from the beginning: that everything should be discussed in direct talks . . . in order to achieve common understanding in order to achieve a peace package," Hamdoon said.

In 1980, Saddam Hussein withdrew Iraq's agreement to a 1975 pact with Iran that divided the Shatt al Arab along the middle, giving each country control of half.

Both countries have strong motivations for seeking a final peace treaty.

Iraq's Saddam Hussein is turning more of his attention to inter-Arab affairs and would like to see his eastern border with Iran secure. Also, Iraq wants the Shatt al Arab cleared of its war debris so it can be used again for oil exports.

Tehran's main concern is to get a withdrawal of Iraqi troops from pockets of Iranian land they still hold along the border. A peace treaty also would boost Rafsanjani's lagging efforts to gear up his country's economy.

A peace treaty would also free at least 70,000 and possibly as many as 100,000 prisoners of war believed held by both sides since the end of the war. They have not been repatriated because of the two countries' mutual distrust.