Mitterrand Urges Israel to Talk Directly to PLO : Mideast: During French president’s visit, Jerusalem announces legislation permitting such contacts.

JERUSALEM —  French President Francois Mitterrand, bidding to make Paris an important channel in Middle East peace talks, urged Israel on Thursday to negotiate directly with the Palestine Liberation Organization and pledged in return that he would ask the PLO not to scorn Israel’s proposals for Palestinian self-government.

“I think that the Palestinian problem is at the center of the present difficulties (in Arab-Israeli negotiations),” Mitterrand told a news conference here, “and therefore it is at the crossroads between war and peace.”

Mitterrand argued, as he had in private discussions with Prime Minister Yitzhak Rabin, that the real way forward is for Israel to talk with the PLO as the representative of the estimated 1.7 million Palestinians living in the occupied West Bank and Gaza Strip.

“This is not a matter of choosing one’s interlocutor--he is already there,” Mitterrand declared. “And, up to now, I have not perceived any other force that can, in fact, speak for the Palestinians.”

Israel took a step, long planned but carefully timed, toward such negotiations Thursday with the announcement that the government next week will introduce legislation permitting direct contacts with the PLO, as long as they are not part of a plot to undermine the country’s security.

But Rabin again drew the line at direct negotiations with the PLO, telling journalists, as well as Mitterrand, that he would not sit across the table from Yasser Arafat, the PLO chairman. He castigated the PLO as responsible for the recent rise in violence in and around Israel.

Rabin, instead, pressed for international acceptance of elections of a “Palestinian Interim Self-Governing Authority” in the occupied West Bank and Gaza Strip as the way to choose Palestinian leaders with a popular mandate; Palestinian delegates to the current peace talks long ago accepted this concept.

Mitterrand had urged Israelis at the outset of his three-day state visit to understand the Palestinians’ need for a homeland. Peace would be possible, he said, only “if one involves the real leaders . . . those who are backed by the popular will.”

He met Thursday evening with Faisal Husseini, head of the Palestinian negotiating team in the year-old Arab-Israeli negotiations, and three delegates to the Washington talks. Roland Dumas, the French foreign minister, then held broader discussions with other Palestinian leaders from the West Bank and Gaza Strip.

His goal in the rare, three-day state visit was plainly to establish France as an alternative mediator to the United States in Israel’s slow-going negotiations with the Palestinians and its Arab neighbors. Dumas had already made a visit to the region, and Paris had hosted regional economic negotiations.

Rabin wants a channel outside of the Washington talks. But in the past, he has not fully trusted France, believing it to be pro-Arab. He was encouraged by the latest efforts.

“I believe that this visit will serve as an opening of a new chapter, a much better one, in the relations between Israel and France,” Rabin said, adding that France “could make an important contribution in multilateral negotiations” running parallel to those between Israel and the Palestinians and each of the neighboring states.

“I believe President Mitterrand is a friend of Israel--even if at times he has different views from the view of the present (Israeli) government,” Rabin said.

Mitterrand said he knew his views on the Palestinians’ right to their own state were not popular in Israel but, quoting the Psalms, he said he would not speak “with flattering lips and a double heart.”

“Who better than you can understand the aspiration of a people to its own land, to build the structures under which it will live--in short, to exist,” he told Israeli leaders at a state banquet in his honor.

He urged Israel to undertake confidence-building measures with its Arab negotiating partners, particularly the Palestinians, to enable them to commit themselves fully to Middle East peace; he suggested no specific measures.

Although he acknowledged with clear regret France’s exclusion from a direct role in Arab-Israeli peace negotiations, which are under American mediation, Mitterrand said Paris and its European Community partners could help build an economically prosperous Middle East “in which peace can take root.” Ministers from the two countries signed agreements to extend and electrify Israel’s railways, create a joint fund for scientific research in new industries and computerize Israel’s education system.

But, in one of the sharper reactions to Mitterrand’s comments, Yitzhak Shamir, the former prime minister of Israel from the right-wing Likud Party, canceled a planned meeting with Mitterrand, saying he was ill.

France’s intervention in the peace negotiations would not help, Shamir also told state-run Israel Radio. France, he continued, had sold “huge quantities of weapons” to Iraq and preferred better economic ties with Arab states to good relations with Israel.

Mitterrand’s 1982 visit was the first by a French chief of state. It ended 15 years of icy relations with Israel.

Mitterrand flies to Amman today for a 24-hour visit to Jordan.