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As Secretary of State James A. Baker III made a surprise visit to Lebanon, Israel`s new government froze all planned construction in the occupied West Bank and Gaza Strip on Thursday but said thousands of apartments and houses in progress would be completed.

The freeze affects nearly 6,700 housing units in the territories that were on the drawing boards but for which real work had yet to begin. In more than half the cases, construction contracts already were signed.

Work also was halted on several West Bank highways defined by senior officials as ”political roads,” designed by the former government to help settlers avoid routes along which they face the risk of physical attacks by Palestinians.

But while freezing future building, the government of Prime Minister Yitzhak Rabin decided not to interfere with more than 8,700 units that are now in various stages of construction, from little more than a hole in the ground to, far more commonly, near-completion.

It also did not touch 1,000 new apartments planned for areas around Jerusalem that Rabin, like his predecessor, Yitzhak Shamir, considers an integral part of Israel and not negotiable.

The go-ahead for housing in progress obviously falls well short of Arab demands for a freeze and, in principle, it also flies in the face of the Bush administration`s opposition to Israel`s settlement activity as an obstacle to peace. But it was not feasible to stop the work in its tracks at this stage, Israeli officials said, emphasizing that the important point was that they had begun to shift national direction on the issue.

It is now up to the U.S. to decide whether the Israeli actions amount to the glass being half full or half empty, and signs suggested that the Americans are inclined to smile on the course that has been charted by Rabin`s Labor-led government.

Although the final shape of the deal still has to be pounded out, the administration seems poised to give Israel billions of dollars in U.S. loan guarantees that had been suspended for months because of friction over the settlements issue.

Housing Minister Binyamin Ben-Eliezer said Rabin had told Baker about the planned housing restrictions when the secretary visited Israel early this week at the start of his latest swing through the Middle East.

In Cairo on Wednesday, Baker pronounced himself ”really very satisfied with the philosophy and the orientation” of the Rabin government on settlements, and he predicted a ”severe and substantial reduction” in construction.

On Thursday, Baker, riding in an armor-plated motorcade, made a surprise visit to Lebanon to reaffirm the nation`s sovereignty and to signal the Syrians that Washington expects them to withdraw their troops from Beirut by this fall, as they have promised.

Baker, the first senior U.S. official to visit Lebanon since Secretary of State George Shultz in 1983, drove from Damascus to Zahle to pay a call on the Lebanese President, Elias Hrawi, in his home village on the western edge of the Bekaa region, where many U.S. hostages once were held by renegade militias.

”Mr. Secretary, I welcome you here in my home, in my country, Lebanon,” Hrawi said at his white stone house in Zahle, whose predominantly Christian residents seemed pleased but stunned by their surprise visitor.

”Your presence here personally is a new and clear assurance of your support for Lebanon`s independence and sovereignty over all of its territory. Lebanon has led a painful 16 years, and by your presence here among us, you are bearing witness to Lebanon`s way out from the misery of war. I hope I will see you soon in our capital, Beirut.”

Baker`s route from Damascus took him through the heart of the Lebanese territory dominated by Hezbollah, the pro-Iranian, Shiite Muslim militia. This necessitated extreme security precautions, including heavy bumper-to-bumper armor on each car, most of which were drawn from the motor pool of the U.S. Embassy in Beirut.

After his Lebanese visit, Baker flew to Saudi Arabia for a meeting with King Fahd.

Earlier, in Damascus, Syrian Foreign Minister Farouk Sharaa ruled out concessions to Israel`s new government. He said the Arabs had shown their flexibility by agreeing to peace talks.