Israeli Prime Minister Benjamin Netanyahu is studying an idea to rekindle talks with Syria as a diversion form the stalled talks with the Palestinian, according to well-placed sources. The talks with Syria, which were broken off in March 1996, could resume after Damascus has shown '' considerable creativity" in the continuing effort to find a formula to resume peace talks according to American sources.

Until recently the Syrians have been entrenched in their position that the talks could only resume "at the point where they were stopped."

But sources close to American peace envoy, Dennis Ross, who has been conducting indirect mediation, say indicate that the Syrians have been showing more and more flexibility concerning the exact definition of this hitherto elusive formula.

Mr Netanyahu informed Damascus, via the Americans, that he has already agreed to "take note" of the agreements reached by the previous Israeli government, while the Syrians are now willing to accept that the previous agreements serve as a "basis" for talks in the future.

The Syrians, long concerned by their exclusion from the Middle East peace process, are said to be increasingly apprehensive about a separate deal, which would extricate Israeli troops from Lebanon.

At the same time, Syria is said to worry that if Israel agreed with the Palestinians on a partial withdrawal of Israeli troops in the West Bank, Netanyahu might feel confident enough to abandon his half-hearted efforts to do a deal with Syria over the Israeli-occupied Golan Heights.

For Netanyahu, the resumption of talks with Syria could provide a political windfall. The creation of a Syrian "alternative" would allow Netanyahu to remain tough with the Palestinians, and at the same time would ease the pressure on the prime minister both from the Clinton administration and from his moderate coalition partners who are demanding progress in the peace process.

Last month (June 4) Israeli television evening news reported that Israeli and Syrian officials met face to face in Texas. It was the first time in more than two years that officials from the two warring neighbours held a brief face-to-face dialogue under American auspices during conference at the James A. Baker III Institute for Public Policy at Rice University in Houston.

Syria's ambassador to Washington, Walid Moualem, delivered a lecture at the opening session called "Why Is Israel Running Away From Peace?" He did not shake hands in public the Israelis on the same platform during the meeting that was chaired director of the Baker Institute, Edward Djerijian, a former US ambassador to Syria and Israel.

Nonetheless, Syrian officials, including Moualem, have refused in the past to attend similar meetings to avoid appearing alongside Israelis since February 1996, when Israel broke off peace talks with Syria in the wake of several terrorists bomb attacks on civilians by HAMAS Islamic extremists. Last month Houston conference was seen as a departure from the Damascus official policy on meeting Israeli officials during international forums.

Taking advantage of the breakdown in the Israeli Palestinian peace talks, and a wave of popular anger against Israel in the Arab world, Damascus is pushing hard for an Arab summit that Israel fears would pressure Egypt and Jordan to cut their ties with the Jewish state. Egypt and Jordan are the only members of the Arab States league treaty that have signed peace accords with Israel. Although the encounter in Houston was brief, Baker Institute director Djerijian called it "very substantive." "In no way did these sessions constitute official negotiations between the parties," he said, "but they were very full, very candid and very frank." Murhaf Jouejati, a prominent Syrian-born American journalist and scholar, also attended the conference. The Israelis present included Uzi Arad, a top foreign policy adviser to Netanyahu; army reserve Maj. Gen Uri Saguy, the former head of military intelligence; former ambassador to Washington Itamar Rabinovich; and several academics. The top-ranking official American was Assistant Secretary of State Martin Indyk, a former ambassador to Israel.