MR. LEHRER: Good evening. Leading the news this Tuesday, PLO Leader Yasser Arafat told the United Nations he was ready to talk peace with Israel at an international conference, Israeli Prime Minister Shamir rejected that proposal, and the State Department said Arafat had not met conditions for dialogue with the United States. We'll have the details in our News Summary in a moment. Robin.

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MR. LEHRER: Yasser Arafat addressed the United Nations in Geneva today. The Palestinian leader laid out a 3 point peace plan to be discussed at an international conference. He asked the leaders of Israel to "come here under the sponsorship of the United Nations so that together we can forge that peace." Arafat's plan called for placing the occupied territories under UN supervision while a permanent settlement that includes a State of Palestine and a State of Israel is negotiated. Israeli Prime Minister Yitzhak Shamir discounted Arafat's words, saying continued acts of PLO terrorism were hidden behind them. He called the speech a monumental act of deception done to give the international community an illusion of moderation. The Associated Press said U.S. officials had worked behind the scenes to see if it would be moderate enough to justify U.S. talks with the PLO. State Department Spokesman Charles Redman said afterward it had not happened. He called it interesting and positive, but said it fell short of what the U.S. required. We'll have full reaction to the speech right after this News Summary. Robin.

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MR. MACNEIL: Our first reaction to the speech is from the Israeli Ambassador to the United States, Moshe Arad. Mr. Ambassador, welcome.

AMB. ARAD: Good evening.

MR. MACNEIL: The U.S., as we've just heard, sees positive developments in this speech, but Israel sees none, is that right?

MOSHE ARAD, Ambassador of Israel to the U.S.: That's right. We see it as an attempt to create a perception of progress, of advancement, of change, but basically, we didn't detect anything new in the speech made by Mr. Arafat today at the same old position which was expressed both in Algiers and in other places, and therefore, we do not see progress.

MR. MACNEIL: You do not see in his repeated references using the word "Israel", in his statement that all states in the region within the region should live within secure and peaceful borders, some movement?

AMB. ARAD: I see this as an acceptance of a certain reality but not as an acceptance of the right of Israel to exist as an independent country. And we didn't hear anything in his speech today or on other occasions which would reject the concepts and the principles of the charter. And as you well know, the Palestinian charter calls the establishment of the State of Israel null and void, calls for the destruction. We didn't hear any reference to it, and even when he's talking about the rejection of terrorism, he still feels that opposing the Israeli presence is legitimate and should not be regarded as terrorism. And only today we had another incident in Israel in which an Israeli civilian and an Israeli soldier were killed in a terrorist incident.

MR. MACNEIL: How did you take his reference when he said many of those listening to him had been branded as terrorists when they were seeking their, fighting for their own independence, and how were regarded as respectable leaders of their countries? Did you see an ironic reference to leaders of your own country in that?

AMB. ARAD: I saw in this whole speech a continuous attempt to parallel and to create the impression that the Israeli presence in the territories is a result of an Israeli aggression, that the Palestinians were subject to Israeli aggression ever since the establishment of the State of Israeli in 1948, an attempt to distort the whole history of the last 41 years. And so the suggestion that he made today that we are dealing with a fascist entity, with an entity which is aiming at destroying the Palestinians, is totally incorrect. I think Israel has been the subject of adversity, of animosity, of attack, of aggression. And so the whole concept at the base of his speech, the whole approach, is actually sending, trying to depict Israel as a fascist entity, as an entity which has no right to exist, and at the same time eventually calling upon Israel to come to terms with an organization which is determined still to destroy the State of Israel.

MR. MACNEIL: Mr. Ambassador, you were informed by Secretary Shultz, first through an assistant and then directly by Secretary Shultz, that the U.S. was negotiating through a third party to influence this speech, is that correct?

AMB. ARAD: No, that's incorrect. We were informed through a third party there were indications about the likelihood that certain conditions, the conditions which were set forth by the United States, would be met, and as you all know and as we have all listened, this wasn't to be so, and I don't think I am at freedom to go into all the details of my communication with the Secretary of State or with his assistant.

MR. MACNEIL: Right. But if Arafat had used precisely the words the U.S. wants or wanted, would Israel feel that he had felt that he had met the conditions?

AMB. ARAD: No, definitely not. We have our own approach and our own view about how to advance the peace process. We do not view the PLO as survival partners for negotiations. We feel that the future and the key to the settlement is in direct negotiations between Israel, Jordanians and Palestinians, and we feel that the PLO is still determined, as long as it regards a charter as its basic key document, that there is no chance for the PLO to become a viable partner for negotiations with Israel.

MR. MACNEIL: So there is no set, no form of words, no set of words which this man, Arafat can use that would qualify the PLO in Israel's view as a negotiating partner?

AMB. ARAD: The first test I think should be deeds and not words.

MR. MACNEIL: What kind of deeds?

AMB. ARAD: And the deeds mean that the continuous violence -- actually, the same speech this morning, and somehow this has been forgotten or the selective parts of it were mentioned, is the fact that he calls for the continuation of the violence. Indeed, he encouraged the continuation of the acts of violence in the territories. So, on the one hand, he rejects terrorism. On the other hand, he legitimizes what he calls the struggle against Israel, and by this, he is encouraging the acts of terrorism against Israeli civilians and against the Israeli presence.

MR. MACNEIL: So does this -- am I right in thinking that the Israeli Government, at least as constituted at present, will never deal with Arafat?

AMB. ARAD: The Israeli position on dealing with the PLO is very clear as long as the organization is determined to the destruction of the State of Israel and this is what the Palestinian charter is all about, if it regards the actual establishment of the State of Israel as an act of aggression, and as Mr. Arafat, himself, said a few weeks ago that this is a racist state and, therefore, it has no right to exist, I don't see what are we going to negotiate about.

MR. MACNEIL: Well, Mr. Ambassador, thank you for joining us.

AMB. ARAD: Thank you.