Damascus, Syria — Top leaders of the Palestine Liberation Organization (PLO) are confident they still have a veto over attempts to revive the Reagan Middle East peace plan, one of the primary goals of US Secretary of State George Shultz's diplomatic mission.
While President Reagan and Mr. Shultz have suggested the Arabs circumvent the PLO in future negotiations, moderate Arabs are taking strong stands in support of the PLO.
President Reagan and Mr. Shultz have been harshly critical of the PLO because it vetoed participation by Jordan's King Hussein in a joint Jordanian-Palestinian negotiating team that was to participate with Israel in US-sponsored peace talks over the future of the Israeli-occupied territories of the West Bank and Gaza Strip. They have suggested that the Arabs sidestep the PLO in future negotiations.
King Hussein had to seek PLO approval to speak for the 1.3 million Palestinians in the occupied territories because of the 1974 Arab League decision that the PLO is the sole spokesman for the Palestinians. The Reagan plan calls for a solution to the Palestinian problem by forming a Palestinian entity on occupied land given up by Israel which would be governed jointly with Jordan.
But in recent days moderate Arab leaders, including Egyptian President Hosni Mubarak, the head of the Arab League, Chadli Klibi, and King Hussein himself, have taken tough stands endorsing the PLO's position. In the past Mr. Mubarak has been critical of the PLO's performance.
King Hassan II of Morocco, senior Palestinian sources say, has sent a message to President Reagan suggesting the US amend the language of the Reagan plan to include the word ''self-determination'' and permit the PLO to name its own representatives to negotiations.
In addition, these sources say, King Hassan of Morocco, King Fahd of Saudi Arabia, and King Hussein are urging the US to begin direct dealings with the PLO. In an interview published April 30 by the Beirut independent daily an-Nahar , King Hussein backed the Reagan plan as ''the only working mechanism'' for a Mideast peace, despite its blockage, but rejected Mr. Shultz's concept that the PLO could be bypassed.
Ths US has held to a 1975 promise by then Secretary of State Henry Kissinger to Israel that it would not deal directly with the PLO until the Palestinian organization recognized Israel's right to exist.
As for the revival of a Jordan-PLO dialogue on a joint negotiating process, supposedly being mediated by King Hassan of Morocco after Jordan broke off talks April 10, Hussein has not totally ruled it out. The Palestinians say they never wanted to cut it off.
But in reality, senior Palestinian sources say, any continuation of the dialogue would be more form than substance, dealing mainly with Palestinian-Jordanian relations.
Hussein has made it clear that the agreement chairman Yasser Arafat refused to sign at the last minute must remain the basis for any future Jordanian-PLO participation in overall peace talks. This agreement con-tained no direct role for the PLO. It mentioned ''self-determination,'' but it did so in the context of advance confederation of the West Bank with Jordan, thus effectively negating a priorim an independent Palestinian state.
This was an attempt to compromise between the Arab-endorsed Fez plan supported by the PLO, which calls for an independent state and a PLO role - but is rejected by the US and has no operative negotiating framework - and the Reagan plan, which draws on an Israeli-Egyptian-Jordanian-Palestinian negotiating framework set up at Camp David in September l978.
But the PLO leadership, including moderates, has become more openly insistent since rejecting this formula, on a direct PLO role in talks and on revised language for the Reagan plan, if not a new plan altogether.
''For 34 years we have been struggling not to let others negotiate on our behalf,'' added a senior Palestinian moderate in a Monitor interview.''That page of a joint team with Jordan is closed. Now we search for a new page.''
Although there is much present and planned motion among Mideast leaders to confer on the next steps, for the moment all eyes are turned to the Shultz mission. The trip is critical. If Mr. Shultz fails to find a formula to get foreign troops out of Lebanon - a last crucial test of flagging US credibility in Arab eyes - the Reagan plan will be buried under Arab disbelief that Israel can be negotiated out of the West Bank.
But even if Shultz finds a formula for troop withdrawals acceptable to Israel , Lebanon, Syria, and the PLO, PLO leaders insist the Reagan plan as now worded will not be acceptable to them or their Arab backers.
''The moderate Arabs know we can't accept the Reagan plan,'' said a senior Palestinian source. ''The Saudis and Moroccans will stand by our wishes.''
King Fahd of Saudi Arabia is expected to tell Shultz that the PLO alone cannot be blamed for the Reagan plan's failure when Israel immediately rejected its call to give back occupied territory in return for peace.
But the US has indicated it has no intention of changing the language of the Reagan plan. Sources here say that in meeting last year with a delegation of Arab leaders appointed by the Arab League, President Reagan specified the US could not include the word ''self-determination'' because that would signify an independent Palestinian state under international law, something the US opposes. He is said also to have noted that neither the US Congress nor Israel would accept this terminology.
The US had hoped the shock of the breakdown of the diplomatic option would spur moderate Arab leaders to pressure the PLO to shift its thinking.