Arafat, Palestinian moderate allies win first round at Algiers summit

PLO chairman Yasser Arafat has apparently won a major victory at the summit of the Palestine National Council (PNC) here, with the moderate position winning the crucial preliminary vote, even on the controversial Reagan peace plan for the Middle East.

Despite months of increasing militancy among Palestine Liberation Organization leaders, a last-minute power play by the wily chief led hard-liners to agree to four of five recommendations to put before the PNC, according to delegates of the 350-member body that is equivalent to a parliament-in-exile.

PNC spokesman Abdel Rahman said the recommendations, which will form the basis for debate during the 10-day summit, include:

* Labeling the US initiative ''insufficient'' and ''unacceptable,'' but not rejecting it outright, as had been predicted.

* Acceptance of the so-called Fez plan, the Arab proposals which include a clause implicitly recognizing Israel's right to exist.

* Recognition of the need for eventual confederation with Jordan, but only after the formation of an independent Palestinian state.

* A continuing freeze in relations with Egypt, although permitting a dialogue with ''democratic forces'' in Cairo.

* Developing contacts with Israeli ''democratic forces'' - those who favor peace with the PLO. On this fifth point, there remain two opposing views.

PLO spokesman Mahmoud Labadi labeled the platform ''a victory for wisdom and moderation.'' Because the PNC has traditionally accepted, with only minor alterations, the recommendations put before it, delegates now predict the moderates will hold the day. In addition, to reinforce his position, Mr. Arafat also made sure the 50 delegates added for the 16th summit were loyal to his mainstream Fatah faction.

The move that scared the radicals into agreeing was a threat by Mr. Arafat during the preliminary meetings of the PLO executive committee to quit as chairman unless the PLO could heal the splits within the eight-sided movement and take a unified stand on negotiating terms, according to delegates.

Just last month, leaders of five of the eight factions met in Libya and issued a statement rejecting the Reagan plan outright. And hard-line officials based in Damascus have long been predicting rejection, warning that if Mr. Arafat persisted on the moderate course, that might split the PLO.

Mr. Arafat reportedly said angrily to the executive committee: ''You reject (UN resolution) 242. You reject Fez. You reject Reagan. What will you accept? What is the alternative?''

The words underline the need for the PLO to come up with a political strategy at this turning point, following the elimination of a military option after the defeat at the hands of the Israelis in Lebanon.

If, as expected, this platform forms the basis for action, it would appear that Mr. Arafat now has a mandate to continue talks with Jordan, particularly about possible participation by King Hussein in US-directed peace talks with Israel.

Western officials in Algiers say, however, that two obstacles remain. The PLO insists that it is the sole representative of the Palestinian people in any negotiations, and that a fully independent state must be formed before any kind of union with Jordan.

The US plan stipulates the formation of only a Palestinian homeland in association with Jordan, but in his speech last September President Reagan specifically said there would never be a fully independent state of Palestine. The US also refuses to talk with the PLO unless it recognizes Israel openly.