Semaphoring with the P.L.O.

After years of belligerence, considering an alternative

The Middle East political landscape seemed filled last week with what the diplomats call signals, and almost all of them involved the Palestine Liberation Organization. Even as the Administration was busy protesting that President Carter had been misinterpreted in his analogy comparing the Palestinian cause with the U.S. civil rights movement, Washington was actively reviewing U.S. posture toward Yasser Arafat's P.L.O.

One indication of Washington's renewed interest in the P.L.O. came early last week, when a debate in the United Nations Security Council on Palestinian rights was abruptly postponed, at the U.S.'s request, until Aug. 23. For one thing, the Administration did not want that debate to be clouded by its current squabble with the Israelis over their opposition to a U.S. plan to replace the 4,000-man armed U.N. Emergency Force in the Sinai with a much smaller number of unarmed truce observers. More important, Washington wanted to buy time for private bargaining over the diplomatic language to be used in a possible new U.N. resolution on the Middle East.

The Kuwaitis, with U.S. encouragement, are trying to find a new formula that would both reaffirm the U.N.'s landmark Resolution 242 of 1967, which implicitly affirms Israel's right to exist, and in addition endorse the Palestinians' legitimate political rights. The Arabs, and the Administration as well, hope that such a formulation might at last allow the P.L.O. to at least tacitly recognize Israel as a bona fide state. This in turn would enable Washington to drop its longstanding boycott of the P.L.O. and open a direct dialogue with it. The Administration's first goal then, would be to bring Palestinians, perhaps even some P.L.O. officials, into the talks between the Israelis and the Egyptians on the future of the West Bank and Gaza. This would greatly help Washington's effort to prove to skeptical Arab governments that the Egyptian-Israeli agreement can indeed lead to a comprehensive Middle East peace deal.

Washington's hopes have been nourished by indications that the P.L.O. may be in the process of scrapping its strategy of perpetual war against Israel. In the view of U.S. analysts, the P.L.O. has been hurt badly by the "hunt and destroy" raids that the Israelis have launched into southern Lebanon since April. The P.L.O. is also disturbed by the degree to which Arab allies like Syria and Iraq have been preoccupied with their own problems. Moreover, Arafat is thought to have been persuaded that continued Palestinian violence only reinforces Israeli Premier Menachem Begin's contention that the P.L.O. is just a gang of "terrorists" that "no decent government" should talk to.

The P.L.O. has begun a new diplomatic drive stressing moderation. Arafat went to Vienna last month for meetings with Austrian Chancellor Bruno Kreisky and former West German Chancellor Willy Brandt. Even if the P.L.O. were to recognize Israel's right to exist, however, Jerusalem would not accept the P.L.O. as the legitimate bargaining agent for the Palestinians. Begin, who was released from his hospital bed last week after treatment for a blood clot that has impaired his vision somewhat, is certain to rebel at any U.S. attempt to dignify the P.L.O. and bring it into the West Bank negotiations. Says one senior Israeli Foreign Ministry official bluntly: "The problem facing Americans is how to involve the Palestinians in the autonomy talks without losing Israel as a participant."

But Washington has other pressures to consider. The Administration knows full well that Saudi Arabia's decision in July to ease the Western oil squeeze by increasing its production by a million barrels a day for a period of three months was not just gratuitous generosity. It was also aimed at spurring U.S. action on the Palestinian question. In fact, TIME has learned that Saudi Crown Prince Fahd himself has played a key role in coaxing Arafat toward moderation. When Fahd got Arafat's consent, he gave the O.K. for increased oil production. Acutely aware that taps can be as easily turned off as on, the Administration fears that if the U.S. does not grasp the opportunity to engage the Palestinians in the peace process now, it could face serious cutbacks in Arab oil supplies in the fall.

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