The PLO: poised on the edge of wider recognition -- or an abyss?

This summer, more than ever before, the Palestine Liberation Organization is on a political threshold. But which way will it go, in or out?

Is it on the verge of achieving still wider international recognition and solid Arab backing in its drive for a Palestinian state?

Or is it about to become a radical pariah of the Arab world, losing even its present modest international clout and possibly facing an all-out Israeli military assault?

Every major Middle East crisis of late has had a Palestinian dimension, say PLO officials and Arab watchers. In one way or another, the Lebanese crisis, the Syrian-Israeli crisis, and even the raid on Iraq's nuclear reactor lead back to the question of Palestine and to the 3.8 million Palestinians without a country.

And closing in are the Israeli general elections, where the main contenders -- incumbent Menachem Begin of the hard-line Likud coalition or challenger Shimon Peres of the Labor Party -- show different approaches to the Palestinian-Israeli problem.Mr. Begin seems likely to be returned to power.

"All of these developments are very much in our favor," Rachid Khalidy, director of the Beirut-based Institute for Palestine Studies, commented June 22.

Indeed, if the PLO could vote in the elections next week, it would vote for Menachem Begin, according to this thesis.

Mr. Khalidy and other Palestinian sources say the prospects of Mr. Begin returning to the prime ministry in Israel will help the PLO by providing it with a foe "who will continue to alienate world opinion and therefore do the best for the Palestinian cause."

Mr. Begin's brinkmanship policies in the Lebanese, Syrian, and Iraqi theaters have, Mr. Khalidy says, "helped prove to Arab regimes the thesis the PLO has long held, namely that the only way to deal with Israel is from a position of strength."

The Begin actions, says Mr. Khalidy, undermine the conservative Arab approach of attempting to pressure Washington to pressure Israel, and they therefore reinforce the PLO approach. Mr. Khalidy feels that over the long run Mr. Begin's policies will contribute to the radicalizing and the drawing together of the Arab world behind the PLO.

This view, which is shared by many in the PLO including, say Palestinian sources, chairman Yasser Arafat, holds that Mr. Peres is a more subtle foe who would push along Arab-Israeli peace options as a way of disguising unbending Labor Party policies toward east Jerusalem, the West Bank, Gaza, and southern Lebanon.

"Peres and Begin have basically the same policies," says a PLO official (who requested anonymity). "The difference is that Peres had deluded some gullible Arabs into believing pipe dreams about peace options involving Jordan. But Labor was in power until 1977 and set up more than 100 colonies on the West Bank during its time. It is worse than Likud."

Mr. Khalidy concurs: "It is not a defeat for us if Begin comes back."

Diplomats in the Middle East believe that in recent months the PLO has been losing ground internationally, especially in Europe. They say that the election of Francois Mitterrand caused a pro-Israel tilt in French policy.

Any future strong showings by socialist parties in West Germany and Britain could further damage PLO standing in Europe and kill chances of a "European initiative" on the Middle East. This could especially be the case, political analysts say, if Mr. Peres, who has links to European socialists through the Socialist International, comes to power.

For the moment, the Mitterrand victory has caused West Germany's Chancellor Helmut Schmidt to move closer to Britain's Margaret Thatcher in European matters. Mrs. Thatcher is closer to the Reagan administration view that the Soviets, not the Israelis, are the prime threat to the Middle East.

But Khalidy and other Arab thinkers argue that it is too early to tell which direction Europe is moving in. A Begin victory, they add, could split European Socialists from Israel.

Meanwhile, Western and Arab analysts warn that a major Israeli strike on Palestinian positions in southern Lebanon is likely soon. PLO officials say that it could come before the June 30 elections.

But most other observers say a strike would be more likely after the election -- when Begin would not have to fear voter reaction to Israeli casualties, or when Peres might feel the need to prove his commitment to Israel's security before maki ng any peace overtures to the Arabs.

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