NEWS ANALYSIS : Palestinians Complicate U.S.-Syrian Maneuvering : Mideast: Washington warns Damascus about harboring terrorists. Yet nations want closer ties.

DAMASCUS, Syria â€”  Diplomats were baffled in November when President Clinton met Syrian President Hafez Assad here and came away empty-handed, gaining neither Syrian concessions on the Mideast peace process nor a condemnation of terrorism in Israel.

“President Clinton didn’t pressure Assad or even ask for anything,� a senior Western diplomat said. “It was a foregone conclusion before the meeting [that] Clinton would at least get Assad to publicly distance himself from attacks inside Israel, and Clinton didn’t even get that. For the Americans, it was embarrassing.�

Clinton’s trip put the Administration in the unusual position of giving credibility to an Arab leader whose country since 1979 has been listed by the State Department as an official sponsor of international terrorism. It also underscored the importance Washington attaches to Syria as a regional power and a key factor in any Middle East peace.

Syria had no comment Wednesday on the warning that Ambassador Christopher Ross privately delivered this month to the Foreign Ministry here, at the request of Secretary of State Warren Christopher, about harboring dissident Palestinian groups that have threatened the United States and led to tighter security at U.S. airports.

Christopher’s Aug. 11 cable to Ross, reported Wednesday by the Washington Post, said it was “particularly disturbing that some of the statements threatening the U.S. have been made by groups and individuals based in Syria.� It said Washington expects Syria to do “everything in its power� to ensure that these groups do not harm U.S. citizens and warned that the United States would respond to an attack “in any way it deems necessary.�

Western diplomats here say Syria has not been a direct participant in planning or executing international terrorism since 1986.

But both in Syria and in Syria-controlled Lebanon, the Assad regime continues to harbor groups responsible for violence in Israel, including the radical Islamic groups Hamas and Hezbollah. Both want to undermine the peace treaty with Israel that Palestine Liberation Organization leader Yasser Arafat approved in 1993.

Hamas, according to Egypt’s official Middle East News Agency, issued a statement warning that the United States “would pay the price� if it extradited one of its leaders, Musa abu Marzuk, to Israel. Abu Marzuk, a Palestinian-born resident of Falls Church, Va., is being held in New York pending an October hearing on Israel’s extradition request.

For his part, Assad continues to assert--as he did again Tuesday in a meeting with Republican Sens. Arlen Specter of Pennsylvania and Hank Brown of Colorado--that Syria condemns terrorism and is committed to achieving an honorable peace with Israel. Negotiations between Israel and Syria, begun in 1991, have struck an impasse, and no new talks are scheduled.

But Assad makes a distinction between international terrorism and attacks carried out inside the Israeli-occupied West Bank by Palestinian groups. His support of those groups gives Assad considerable power to determine the final shape of a regional peace treaty, and Assad, who says “partial� peace is unworkable, has been openly critical of Jordan and the PLO for making separate deals with Israel.

With Syria’s Soviet allies having long since disappeared, Assad is eager for closer relations with the West, particularly the United States; those relations have steadily improved after years of hostility. Syria’s continued inclusion on the State Department’s terrorist list, along with countries such as Iran and Libya, is known to be a nettlesome issue to Assad.

In 1986, Washington withdrew its ambassador to Syria in response to evidence of Syrian involvement in an attempt to blow up an Israeli plane. Syria later used its influence to gain the release of U.S. hostages in Lebanon and joined the coalition forces in the Persian Gulf War.