A Jewish dignitary arriving from London gets an earful from Syria's aging President Hafez Assad about how much he wants to finish negotiations with Israel. Members of the ruling Baath Party are told in small conclaves that peace is in Syria's national interest. Syria scuttles suggestions for a summit conference among states bordering Israel, as if to avoid detracting attention from its own concerns.

To diplomats and other observers here, Syrian as well as foreign, the signs are subtle but unmistakable: Assad is ready to deal, and with a new Israeli leader in place, his government is eager to resume the peace talks with Israel that were suspended in 1996.

Recent events and comments "are a pretty good indication of a desire to get to the table," said one diplomat, sharing an opinion held by many in the Syrian capital. Said another, "The atmospherics are extremely positive. . . . The tenor has changed."

Starting up the stalled "Syrian track" of Middle East peace negotiations would be a crucial step for the region, opening the way for a final settlement between Damascus and Jerusalem and raising hopes for a formal end to the half-century of conflict between Israel and its Arab neighbors.

Syria and Lebanon are the two immediate neighbors without a peace treaty with the Jewish state. The other two, Egypt and Jordan, signed treaties long ago, and the Palestinian leadership, now seated in Gaza and the West Bank, has signed several peace accords and renounced conflict in its struggle for an independent state.

With Assad's government exercising decisive influence over Lebanon, a peace treaty with Syria could be expected to produce a parallel agreement between Jerusalem and Beirut. This in turn would permit untangling the only active Arab-Israeli front remaining: southern Lebanon.

Israeli troops who have controlled a swath of southern Lebanon for two decades seeking to head off raids on northern Israel come under constant attack from a militia sponsored by Lebanon's Shiite Muslim Hezbollah party, aided by Iran and supplied through Syria. The newly elected Israeli prime minister, Ehud Barak, has said that securing the border and withdrawing Israeli troops are among his top priorities -- an indication that he, too, is eager to talk.

Separated by a United Nations force and miles of barbed wire, Israel and Syria technically remain at war. Since Israel's victory in 1967, it has occupied about two-thirds of Syria's Golan region, nearly 800 square miles. Home to several thousand Syrians living under Israeli rule, it is agriculturally rich and highly symbolic territory that the ailing Assad wants to reclaim before his rule ends.

Optimists here say that the two sides, perhaps with U.S. mediation, could begin discussions by late summer. If it gets that far, Syrian officials say they believe the negotiations have a high probability of success.

"If you ever hear that Syria and Israel open a negotiation, if the Syrian and Israeli delegations meet, it is going to happen. It means an end, a final peace," said Mounzer Moussly, a Baath Party member and a member of the Syrian People's Assembly.

Publicly, Syrian statements about the peace process remain fixed: Israel must take the initiative and agree to resume discussions from the point where they fell apart in 1996. From the Syrian perspective, expressed by Foreign Minister Farouk Charaa in an interview in April with the Saudi weekly Al Wasat, the earlier discussions produced "80 percent of a peace treaty" and included "significant progress" toward Israeli withdrawal from Golan.

Missing from those earlier talks, analysts say, were security arrangements and Syrian guarantees to satisfy Israeli concerns about surrendering the well-policed buffer zone that Golan represents, with its prominent chain of hilltop radar and observation posts.

Assuming Barak is willing to relinquish the land, Syrian offers on the security issue, as well as help in ending violence in southern Lebanon, would form the core of the negotiations. Around that would revolve issues such as the fate of several thousand Jewish settlers who have moved into Golan and rights over the sources of the Jordan River.

Despite Syria's apparent eagerness to resume talks, there are reasons to be skeptical. One of Syria's chief allies is Iran, which remains staunchly opposed to Israel. In addition, Assad may be unlikely to reach a final agreement unless progress is also made on a final deal with the Palestinians.

However, Syrian internal politics may be pushing Assad toward settlement. Assad, 68 years old, suffers from diabetes and other ailments. His health has been described as highly cyclical -- good periods following bad ones.

Recently elected by acclamation to another term, Assad is believed to want to help pave the way for his son, Bashir, to at least compete to replace him. Settling the conflict that has preoccupied Syria for so long could further that end by allowing Bashir, for example, to begin updating the country's information, financial and economic policies.

Settling with Israel could allow the country's energy -- not to mention its outsize security budget -- to be redirected toward reversing a drop in income estimated at more than 20 percent since the 1980s, said Aref Dalila, former chair of the Damascus University economics department.

Assad would "prefer to do it now. . . . Nobody benefits from a situation of non-war, non-peace. We all pay for this," he said. "There has been a very long stagnation."

Nowhere is a settlement more hoped for than in Golan itself, an area where farmers work in the shadow of Israeli observation stations, U.N. guard posts dot the countryside, and Syrians on one side of the divide shout across a valley to keep in touch with family members behind the Israeli line.

About 153,000 Syrians lived in the area when war erupted, said Mohammed Ali, spokesman for Kuneitra, the regional capital. About 400,000 Syrians claim the occupied parts of Golan as their home, and might hope to return from around the country.

"When they give us our land back," he said, "anything can be negotiated."

CAPTION: Disputed Territory: Israeli and U.N. observation posts and the homes of Israeli settlers pepper the Golan Heights, occupied by Israel since 1967.

CAPTION: Assad: At age 68, Syria's president is believed to be thinking about paving the way for his successor.

CAPTION: Barak: Israel's new premier, with portrait of predecessor, Yitzhak Rabin, may be willing to leave Golan.