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JERUSALEM — It was Black Monday for Prime Minister Ehud Barak.

His peace policy was reeling, following Syrian President Hafez Assad's rejection the day before of Barak's peace proposals, which were advanced by no less an advocate than President Clinton.

And his coalition was tottering, too, after the attorney general decided to launch a criminal investigation of the spiritual leader of the fervently religious Shas Party, which has been locked in an ongoing battle with another major partner in Barak's governing coalition, the secular Meretz Party.

The attorney general ordered the investigation after Rabbi Ovadia Yosef earlier this month called on his followers to lay a curse on Education Minister Yossi Sarid, the head of Meretz.

In terms of both Syria and the criminal probe, some officials were still assuring one another, and seeking to assure the prime minister, that all was not as bleak as it looked.

Clinton, in his first public remarks on his diplomatic bust in Geneva, threw the fate of the negotiations with Israel directly into Assad's hands Tuesday, saying it is up to the Syrian leader to provide fresh ideas about how to bridge gaps and move the process forward.

"I went to Switzerland to meet President Assad, to clarify to him what I thought the options were and to hear from him what his needs are," Clinton told reporters before meeting Egyptian President Hosni Mubarak at the White House. "And I asked him to come back to me with what he thought ought to be done. So the ball's in his court now, and I am going to look forward to hearing from him."

While Barak himself said Monday that Assad had "removed his mask," revealing that he was "not ready to make the sort of decisions necessary for… peace," he also tried his best to strike an optimistic note. He told members of his faction that "we have not closed the door…on the continuation of talks with the Syrians."

Others echoed that sentiment. The head of the Israel Defense Force, Lt. Gen. Shaul Mofaz, suggested in a Knesset briefing that there might yet be life after death on the Syrian track — despite the slap in the face that Assad had effectively delivered to Clinton Sunday in Geneva, when they failed to find a basis for resuming Israeli-Syrian negotiations.

Observers attribute Mofaz's optimism to the army's reluctance to embark on a withdrawal from Lebanon without an accompanying agreement involving Damascus.

Mofaz and his fellow officers are warning that a unilateral withdrawal could go awry if there are continued attacks by Hezbollah or other terrorists against Israeli border settlements after the pullback, and if the IDF replies with massive force against Lebanon's infrastructure.

The Syrian army could quickly get sucked in, they warn, and full-scale warfare could erupt.

Similarly on the domestic front, Barak was assured by members of his Labor Party, and indeed by ministers in Shas, that it is not a foregone conclusion that Shas would withdraw from the coalition because of the criminal investigation, which party members see as a grave insult to their revered leader.

Despite the diehard optimists, however, most observers here feel that even if the Syrian negotiations continue through some back channel, there is unlikely to be any breakthrough before Barak's July deadline for a unilateral withdrawal from Lebanon.

Some of these observers predict, in fact, that Barak will now speed up the pullout to May or June.

The talks in Geneva are understood to have stalled over a tiny but symbolically significant sliver of land: the eastern coastline of the Sea of Galilee.

Barak has vowed that Syrian soldiers will not "dangle their feet" in the Galilee, Israel's chief source of water. His pledge has become a mantra: There would be scant support in a referendum on a final peace deal with Syria if he were to abandon it.

For Assad, on the other hand, the memory of Syrian soldiers doing precisely that before the 1967 Six-Day War apparently burns bright — and he is determined to restore that situation.

Assad reportedly spurned Barak's proposal that Syria agree to let Israel hold a narrow strip of land along the eastern shore in return for the el-Hama hot springs, located southeast of the sea, which were clearly part of Palestine under the 1923 British-French demarcation of the border between Palestine and Syria.