Baker Cooling Off Diplomatic Brush Fires Among Foes : U.S. role: Secretary of state finds he can’t stay on the sidelines. He keeps busy as an Arab-Israeli go-between.

MADRID —  Secretary of State James A. Baker III came to this week’s Middle East peace conference hoping to see some conciliatory gestures from Arab and Israeli leaders--and aiming for a rapid start of one-on-one talks on the issues that have touched off five wars.

Instead, the gestures have been few and painfully grudging, and Baker has found himself enmeshed in behind-the-scenes negotiations over procedural problems simply to keep the talks on track.

In public, Baker maintained an impassive face as he presided for five hours Thursday over a conference whose rhetoric grew more contentious as the day wore on.

But in private, diplomats at the meeting said, he maintained a grueling schedule of quiet meetings, telephone calls and huddles with aides to put out small diplomatic fires before they turned into serious problems.

On the eve of Thursday’s session, he met late into the night with Palestinian leaders in his suite at the Palace Hotel, warning them against any explicit declaration of allegiance to the Palestine Liberation Organization, an action that might prompt an Israeli walkout.

The Palestinians agreed, one member of their delegation said, and even read Baker excerpts from their draft speech to ensure they would cause no serious problems.

On Thursday, officials said, Baker dickered with both Arab and Israeli officials toward a solution of their argument over where the next phase of talks should take place--a frustrating procedural problem that could block any substantive progress in the talks.

That issue seemed to abate somewhat when U.S. and Israeli sources said late Thursday that Israel had agreed to at least launch the next phase of the negotiations in Madrid.

But the Israelis, as they have been pressing since they arrived, hoped quickly to move the next round of discussions to the Middle East, with Arab diplomats visiting Israel and Israelis traveling to Arab capitals. The Israelis say the shift in site is important to ensure substantive talks occur. But the move makes the Arabs uncomfortable because it might force them to go further than they want in recognizing Israel.

The question has been but one of many confronting Baker. Between formal sessions, he met briefly with officials from both sides in the glittering 18th-Century anterooms of Spain’s Royal Palace.

None of this was quite what Baker had in mind when he promised that the mere opening of direct talks between Israel and its Arab neighbors would create a new “chemistry” and make their ancient hatreds mellow.

Baker has often warned that progress would be slow, saying, “We have to crawl before we walk.” But it was clear from his own pursed lips at some of the most hostile Arab and Israeli rhetoric during Thursday’s session, and from the harried faces of his aides, that even crawling had turned out to be more difficult than they expected. “We’re crawling as hard as we can,” said one.

For Baker, one lesson of the first two days of the conference has been that, if the embryonic peace process is to work, it will require continuous American pressure.

As recently as two weeks ago, Baker’s closest aide, Margaret Tutwiler, told reporters that the secretary of state did not intend to devote the same relentless attention to the negotiations, once they were under way, as he had to the eight months of preparatory talks. By Thursday, that confidence was gone, and Baker aides were talking privately about the possibility of regular visits to the talks for the foreseeable future.

A second, equally unwelcome lesson was that even at this late date, both Arabs and Israelis are trying to score procedural points against each other--because in the Middle East, every detail of procedure is taken as reflecting an issue of substance.

The Palestinians, for example, crammed their speech with almost a dozen complimentary references to the PLO, its institutions and its chairman, Yasser Arafat--but stopped just short of proclaiming themselves the PLO delegation.

Israeli delegates complained to Baker aides that the Palestinians were violating the spirit of the U.S. assurance that the PLO would not participate. One Israeli diplomat was even put to work listening to a tape of the speech to see whether Palestinian delegate Haidar Abdel-Shafi had gone too far and referred to Arafat as “our” chairman.

Combined with the feuding over the site of the next round of talks, the two sides, in a sense, appeared to be playing a game of diplomatic chicken, each trying to maneuver the other into walking out--and drawing the Bush Administration’s ire. Baker was caught squarely in the middle, like a traffic cop trying to impose order on a highway of teen-age hot-rodders.

According to diplomats, he warned both sides that the Administration will be quick to blame anyone who blocks the bilateral talks from beginning.

He passed word Thursday that he wanted to leave Madrid in time to be back in the United States for the opening of the Reagan Presidential Library in Simi Valley on Monday, a leak that looked to some like a gambit to increase pressure for a solution to the dispute over the continuation of the talks.