The Bazaar Is Open

By JEANNE McDOWELL

The rules for a successful negotiation are pretty straightforward. All sides must want to make a deal, and everyone must come away with something. Last week it looked as if most of the parties in the complex hostage drama were at least talking about a deal. But satisfying everyone poses such a monumental challenge that any solution will take a long, long time -- if it comes at all.

The rapid movement provoked by Israel's kidnaping of Shi'ite Sheik Abdul Karim Obeid has given way to a lengthy process of public posturing and private dickering. Israel offered the Shi'ites a simple swap: your guys (Obeid and 150 Shi'ite prisoners) for our guys (three captured Israeli soldiers), plus the 15 Westerners held hostage. But Jerusalem's agenda is not interchangeable with Washington's: while Israel would probably jump at a deal returning its prisoners, even without the foreign hostages, it would reject any that did not bring home its three soldiers.

The Bush Administration staked out a surprisingly supple position designed to maximize the chances for a successful negotiation without succumbing to an outright trade that would violate American policy against ransoming hostages. George Bush repeatedly made clear his willingness to talk to anyone. "If there are changes taking place, signals that are shifting, I don't want to miss a signal," said the President as he sent forth a stream of messages by television and telex. His main objective: to open a dialogue with Iran, which the Administration believes can influence, though not necessarily deliver, freedom for the hostages.

In a series of interviews and statements aimed at newly elected President Ali Akbar Hashemi Rafsanjani, a pragmatist considered eager to end the isolation of the Khomeini era and repair his shattered economy, Bush held out the possibility of warmer relations in exchange for help in freeing the U.S. hostages. While Bush did not disavow the Reagan-era prohibition against direct bargaining with terrorists, he shifted ground enough to make some kind of negotiation possible. His private communiques, sent via the Swiss embassy in Tehran and other intermediaries, elicited encouraging replies from Rafsanjani.

Administration officials hope to convince Iran that hostage taking has few benefits and obstructs the potentially lucrative flow of trade and commerce. This includes Iranian assets, estimated by Tehran at $11 billion, that have been frozen since the U.S. embassy in Iran was overrun in 1979. Restoring the flow might give Iran incentive to press for the release of the captives and a halt to terrorism.

The Shi'ite terrorists holding the hostages stated their position the way they often do. In the southern Lebanese town of Qleia, houses shook from the blast of a bomb attack on an Israeli convoy that wounded five soldiers and one militiaman from the Israeli-backed South Lebanon Army. "We'll show them that we are hard food to chew," proclaimed Hizballah's military chief in Beirut. Other terrorists sought revenge for the humiliation of Obeid's kidnaping.

Yet the mood of the terrorists seemed to be shifting. The spiritual leader of Hizballah, Sheik Mohammed Hussein Fadlallah, modified his tough position by calling on all parties to help end the ordeal of the hostages. Explained Martin Kramer, an expert in Shi'ite affairs at Tel Aviv University: "They want to regain their dignity and pride and then proceed to negotiate."

The Shi'ites would have to participate, however indirectly, in any deal. Even friendly relations between Bush and Rafsanjani are no guarantee of the captives' return. While Iran exerts influence over Hizballah, which it has been bankrolling since 1982 at an estimated $60 million a year, no one knows precisely how much control Tehran has over the disposition of the hostages. At least seven factions, each with its own agenda, have claimed responsibility for one or more kidnapings since the wave of terrorism began seven years ago. In the end, the particular interests of these small and shadowy groups that operate under the loose umbrella of Hizballah will have to be taken into account.

The hostages are also pawns in the games played by powerful Middle East states. In Iran, they are part of a domestic power struggle between Rafsanjani and his hard-line Interior Minister, Ali Akbar Mohtashami, who served as paymaster to Hizballah in the early 1980s. Experts feel that Mohtashami's - ability to sustain the hostage holding will be a litmus test of his power under the newly elected President. Syria, which maintains about 25,000 troops in Lebanon, could improve its relations with the West by rescuing the hostages, but it wields little influence over the Shi'ites who hold them. Still, the U.S. believes Syria could use its intelligence network to locate the hostages and flex its military muscle to press for their release.

Syria, in fact, appears just as powerless as other would-be peacekeepers in Lebanon, which has been reduced by 14 years of civil war to a lawless slum where kidnaping and murder are the norm. The fate of the hostages is tied as much to the bitter backyard struggle for power in Beirut as to international diplomacy, and that struggle has grown worse. Over the past five months, artillery duels between the Lebanese Christian General Michel Aoun and the Syrians have killed at least 600 people and wounded nearly 1600.

Last week the shelling sharply intensified, spreading well beyond Beirut's boundaries and leading some observers to speculate that Syria might be making a decisive assault. "Until the problem of Lebanon is solved," says a Lebanese diplomat, "there will never be a resolution of the hostages."

With reporting by Ron Ben-Yishai/Jerusalem and William Dowell/Cairo