The bad news from Secretary of State James A. Baker III's search for peace between Israel and its neighbors is that the problems -- what land to concede to what Palestinians for what regime -- appear as insurmountable as ever. The good news is that none of the countries wants to be seen as the obstacle to the achievement of peace, a sea change in their attitudes.
The objective circumstances that made the initiative possible at this time are these:
* Each of the main players is beholden to the U.S. and anxious to please Washington. The Soviet Union has changed its policy from support of Arab intransigence to something like cultivation of Israel. This allows Israel to accede to a conference under Soviet co-sponsorship with the appearance of having made a concession.
* Saudi Arabia, Kuwait, the Persian Gulf emirates and Syria have had a great scare from Saddam Hussein's imperialism and his successful demagogic appeal to Palestinian statelessness. This may make them so anxious to end that festering sore in the Middle East that they may come off their determination to be last in the bloc to recognize Israel. That is the most significant possible change, and the one most worth exploring.
* The PLO miscalculated the Iraq-Kuwait affair so catastrophically that hopes arise that even the Palestinians will dismiss its importance. The Palestinians who saw Secretary Baker were unwilling to do so, for fear of assassination or out of genuine zeal. But the word from Saudi Arabia that it is ending subsidy for the PLO dovetails with the repeated insistence of Israeli Prime Minister Yitzhak Shamir and Foreign Minister David Levy that a Palestinian negotiating team exclude the PLO. The possibility of a mutually acceptable formula arises.
The reluctance of Mr. Shamir foremost, and most Israelis to some extent, to sacrifice as much land as Arabs require for guarantees of peace and security, are still genuine obstacles. Until now, they were not really the immediate problem. None of the Arab sovereignties was willing to emulate Egypt in recognizing Israel, the only policy that could, in the case of Syria, retrieve its land or, for the others, provide a decent improvement in the lives of Palestinians. Now they might.
Any genuine progress would be subject to wrecking efforts bthose left out, which would include Saddam Hussein's discredited but defiant regime in Iraq, Libya and now the PLO playing the role that anti-PLO factions did when the U.S. was talking to Yasser Arafat. Mr. Baker is moving from the momentum of success and victory, a momentum fast disappearing. His successful meetings in Cairo and Jerusalem do not disguise the difficulties and incredible complexities ahead. But it would have been wrong for him not to try.