In a significant concession, Syria has agreed to "friendly and good neighborly relations" with Israel--including open borders, full diplomatic relations, and arrangements on trade, tourism and transportation--in the event the two countries reach a peace agreement, according to a U.S.-drafted document.

Syria also has offered to provide Israel with an early-warning station manned by U.S. and French military observers on the Golan Heights, the strategic highland whose return Syria demands as its main condition for peace with the Jewish state, the document says.

The seven-page document outlining areas of agreement and dispute--at least as perceived by the United States--was presented to Syrian and Israeli negotiating teams by President Clinton during their landmark talks last week in Shepherdstown, W.Va. A copy of the supposedly secret text, which U.S. officials have described as a potential first draft of a peace treaty, was reprinted yesterday in the Israeli newspaper Haaretz.

The document makes clear that the two sides still have not resolved many key issues, including access to water, security arrangements and the all-important question of a future border. It suggests that Israel wants to reserve the right of Jewish settlers to remain in the Golan even after it reverts to Syrian control, although it is unlikely that many would choose to do so.

Timing, moreover, may still be a sticking point; the document does not say how quickly Syria is willing to normalize relations with Israel.

State Department spokesman James P. Rubin cautioned reporters yesterday against drawing conclusions from the leaked document, noting that neither side has signed off on the text and that some areas of agreement "might be linked to satisfactory resolution of other issues." But he did not dispute its authenticity.

Last week, Rubin said the document "does contain what we believe to be those areas where agreement has either been reached in the past or could be perceived to have been reached here as a result of discussions."

In that regard, the document indicates that Syria has shown more flexibility on several key issues than generally has been recognized. It also lends credence to Israeli Prime Minister Ehud Barak's statement earlier this week that Israel and Syria could reach a "framework agreement" in two months. Talks are scheduled to resume in the Washington area--probably in Shepherdstown--next Wednesday.

Especially striking is the document's language on the nature of future relations between the two longtime enemies. It has long been assumed that Syria's hard-line president, Hafez Assad, would resist the kind of "warm peace" that characterizes Israel's treaty with Jordan. Even the word "normalization," as understood in Damascus, until now has meant something close to a Syrian capitulation to Israel.

According to the document, however, Assad has signed off not only on full diplomatic relations with Israel--including an exchange of ambassadors--but also on a host of lesser provisions that Israel regards as critical to maintaining a stable peace.

These include promotion of "bilateral economic and trade relations, including . . . the free and unimpeded flow of people, goods and services between the two countries"; removal of "discriminatory barriers to normal economic relations"; and the opening of road, rail and communication links between Syria and Israel. The Syrians also have agreed to "facilitate and encourage mutual tourism," the document says.

"The passages on normalization were vastly more satisfactory than we'd been led to believe," said an official from a major American pro-Israel group. "That was a surprise."

The document also sheds light on another critical element of the negotiations, centering on security arrangements. Captured by Israel in the 1967 Middle East War, the Golan has long been regarded by Israel as a buffer against Syrian attack. Giving up the plateau, Israeli officials say, will require Syria to provide the Jewish state with sufficient early-warning capabilities to compensate for its loss.

During a previous round of talks that collapsed in 1996, Syria rejected any Israeli or foreign presence in the Golan, arguing that technical means--such as U.S. satellites or camera-bearing balloons--could provide Israel with intelligence on Syrian military movements, according to published accounts.

Syria's latest offer--to permit U.S. and French observers in the Golan, but no Israelis--appears to signal an advance from that position. Israel is continuing to insist on maintaining a presence on Mount Hermon.

Other differences concern the position of the final border and the extent of demilitarized zones. The document restates Syria's public position that Israel withdraw to the line it occupied on June 4, 1967, the eve of the Six Day War.

Rubin said Clinton and Assad spoke by telephone yesterday about the need to make progress in the next round of talks.