U.S. and Israeli officials are taking pains to ensure that Washington's decision to open talks with the PLO does no long-term damage to their relations.

President Reagan on Thursday vowed the new U.S. dialogue with the PLO would not weaken American support for Israel, and Israeli diplomats said the relationship was strong enough to sustain such a jolt.Reagan and President-elect Bush welcomed the diplomatic breakthrough, but both stressed that the strong U.S. relationship with Israel would continue.

"We have made it very plain that we have not retreated one inch from the position of guaranteeing the safety of Israel," Reagan said on Thursday, adding that if the PLO failed to match its conciliatory words with performance, "We're back where we started."

Bush applauded PLO leader Yasser Arafat's statement in Geneva Wednesday, which Bush said satisfied U.S. conditions for a dialogue: clearly stating Palestinian recognition of Israel's right to exist, renouncing terrorism and agreeing to U.N. resolutions 242 and 338, which urge that the territorial integrity of all nations in the Middle East be respected.

But Bush, who becomes president on Jan. 20, also said the U.S.-PLO contacts were no substitute for direct talks between "for example, King Hussein of Jordan and the Israelis."

The State Department emphasized the U.S.-Israel bond was "long-standing, firm, unshakeable" and said the opening of a dialogue did not mean a recognition of the PLO.

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Despite reassurances, Israeli ambassador in Washington Moshe Arad said he viewed the decision with disappointment and regret, but counted on strong U.S.-Israeli ties to survive the crisis.

"We are allies and I feel the strong relationship between our two countries in the long term will not be affected," he said. "We feel this was not the right move, but we will continue to argue and to have an exchange of views."

On Capitol Hill, senators and congressmen generally praised the move to open talks but urged caution because of the PLO's past reputation. Palestinian groups in the United States were jubilant.

"We are overjoyed by this step and I think that our people in the office are very happy to hear the announcement," Said Hamad of the Washington-based Palestine Affairs Center told Reuters.

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