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The United States and Soviet Union scaled back expectations Friday for reaching a major missile-reduction agreement at next month's superpower summit but narrowed differences over German unification and the flight of Soviet Jews to Israel.

Secretary of State James A. Baker III said Moscow had dropped its insistence that a reunified Germany be neutral. "There was a recognition that perhaps neutrality is not the best route to go," he said.In the windup of three days of high-level U.S.-Soviet talks, President Bush cautioned Soviet Foreign Minister Eduard A. Shevardnadze that a crackdown against the breakaway republic of Lithuania would be a setback to superpower relations.

"We're telling them what not to do - and that is, don't use force," Bush said later.

"We have an awful lot at stake in the U.S.-Soviet relationship, an enormous amount at stake," Bush said at an appearance before the convention of the American Society of Newspaper Editors. "It gets into arms control, it gets into human rights, the exit of Soviet Jews, it gets into regional questions."

B Separately, Shevardnadze told reporters "we have a clear conscience" on Lithuania.

The president and the foreign minister met at the White House for two hours and 20 minutes - more than twice as long as scheduled - in preliminary discussions for Bush's five-day summit with Soviet President Mikhail S. Gorbachev beginning May 30.

- "This summit will certainly become a major event in world affairs," Shevardnadze said afterward, standing under an umbrella in a cold rain outside the White House.

Similarly, Bush said later, "This is an important time for discussion and dialogue."

Both the United States and Soviet Union expressed reservations about being able to resolve the major issues for a new treaty to reduce long-range nuclear weapons before the summit, a goal they set for themselves when Bush met Gorbachev last year in Malta.

Shevardnadze said, "I would not hide from you the fact that . . . we have encountered certain difficulties, certain problems" in Washington for a Strategic Arms Reduction Treaty.

"This is a time of hard choices, the hard choices that one has to make in the concluding stages of the talks," the foreign minister said. He said the problem was compounded by the need to write a treaty that would be approved by a newly independent Soviet parliament.

The foreign minister took a conciliatory stance on the unification of East Germany, a Soviet ally, with West Germany, the linchpin of NATO.

"We have to look for a solution, a solution that would be acceptable" to both NATO and the Warsaw Pact, Shevardnadze said.

He did not offer any specifics but said, "It is possible that we will be able to find a mutually acceptable way, a way that will make sure that a unified Germany is a factor for stability in Europe and that it never threatens anyone."

Shevardnadze also held out the prospect of resuming normal diplomatic ties with Israel after a 23-year lapse - depending on "the overall Middle East situation."

- On the thorny issue of Lithuania, there was little indication of any movement. "It was primarily (for) both sides to repeat their positions," he said.