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Arab leaders on Saturday condemned the new right-wing government in Israel and blamed the United States for allowing the Jewish state to pursue hard-line policies against the Palestinians.

Arab leaders also called on the United States to link aid to Israel with cooperation in Mideast peace efforts.The Arab call came in a letter given Monday to Robert Pelletreau, the U.S. ambassador in Tunis, where the Arab League is headquartered. It was made available to the Associated Press in Cyprus on Saturday. The letter was drafted on instructions from the Arab League summit in Baghdad May 28-30.

"The Arab countries expect the United States to make a link between aid extended to Israel and Israel's cooperation with peace efforts. Such a step would restore credibility to the U.S. Middle East policy and start a new era in the history of Arab-American relations," the letter said.

It also called on the United States to adopt "practical steps" to keep Israel from using U.S. aid to set up new settlements for Soviet Jewish immigrants in Israeli-occupied territories.

An expansion of settlements in the occupied lands is among the policies of the new Israeli coalition formed Friday by Prime Minister Yitzhak Shamir. Parliament will vote on whether to approve the new government soon.

The coalition also pledged to "uproot" the 30-month-old Palestinian uprising in the occupied West Bank and Gaza Strip and renewed Israel's refusal to talk with the Palestine Liberation Organization, which it regards as a terrorist group.

In Jordan, Foreign Minister Marwan Kassem said the new Israeli government would have "negative effects in the region."

"In its current formula and with Shamir's statements of his government's policies, all hopes for a just and comprehensive peace in the Middle East are destroyed," he said during a break in a parliamentary session.

Kuwait state radio said the new Israeli government's program was "a blueprint for war" and declared the United States would be held responsible for any Israeli aggression against Arab countries.

Kassem also called on the United States to maintain its 18-month-old dialogue with the PLO, which most Arabs consider the sole negotiating agent for the world's 5 million Palestinians.

President Bush said on Friday he was considering halting those talks due to a thwarted seaborne attempt to attack targets in Israel mounted by the Palestine Liberation Front, a PLO faction.

Bush suggested that if the talks were to continue, PLO Chairman Yasser Arafat should publicly condemn the attack. Arafat has denied involvement in the assault but refused to condemn it.

Washington opened talks with the PLO in December 1988 after Arafat renounced terrorism and recognized Israel's right to exist.