London — It looks increasingly as though Western Europe's much-talked-about diplomatic initiative for the Middle East will be extremely limited in scope. As far as the United States is concerned, this is all to the good. The Americans think that any major European move aimed at helping to resolve the Arab-Israeli conflict might instead reinforce tendencies toward intransigence on the part of both the Arabs and Israelis.
As it is, West Europeans are having trouble coming up with new ideas and alternatives to the American-supported negotiations between Egypt and Israel that were set in motion at Camp David more than a year ago.
But the "target date" of May 26 for an Egyptian-Israeli agreement on autonomy for the Palestinians in the Israeli-occupied territories has now been reached with little progress to show on matters of substance. The West Europeans are agreed that they must soon make some move on the diplomatic front to demonstrate that the West is sensitive to Arab concerns about the Palestinian problem.
Both the British and the French, who are taking the lead in attempting to produce a European initiative, hold out little hope the Camp David process can succeed. They are convinced President Carter is too dependent on support from the American Jewish community this election year to exert the pressure on Israel that they think is required.
The danger, as the Europeans, see it is not of another Arab-Israeli war or another Arab oil embargo, at least not at this time. The danger, they say, is that the lack of progress on the Palestinian issue is undercutting the ability of "moderate" Arab states such as Saudi Arabia to cooperate with the West.
"The Saudis find it more and more difficult to stand up for the West or to call for Western help," said a British specialist on the Middle East.
"Arabs are telling us that the Israeli occupation is more important to them than Afghanistan," he said, adding that as long as the Arab conflict with Israel remained the "touchstone" of Arab thinking, and as long as it remained unresolved, the easier it was for the more radical Arab nations to take the lead in the region.
The Europeans would like to find a formula that addresses itself to Arab concerns but that also gains at least the tacit endorsement of the Americans. US Secretary of State Edmund S. Muskie, however, has been consistently urging the Europeans not to take any step that would divert attention from the Camp David process.
The US has also made clear that if the Europeans went ahead with one of their original ideas, which was to go to the United Nations Security Council with a resolution recognizing the Palestinians' right to self-determination, the US would veto it.
Given such opposition from the Americans, a European diplomat said the best that the Europeans might be able to do would be to lay the groundwork for a new United Nations resolution which the US might find more workable once the US presidential elections are past. He said the Europeans might also open up more formal and high-level contacts with the Palestine Liberation Organization in an effort to "pin down" the organization's leaders as to where they stood on the key question of accepting Israel's right to exist.
A further, unspoken aim in the minds of some Europeans seems to be to differentiate the European from the American approach in order to protect extensive European oil interests and bilateral relations with Arab nations.