Sidon, Lebanon — The old Lebanese man in the battered van was selling firecrackers to the small children of this Sidon neighborhood. Setting off firecrackers is a tradition during Ramadan, the holy month in which Muslims fast.
But the van was parked near an Israeli military headquarters and, after a whispered conversation with a superior, an Israeli soldier asked the firecracker salesman to move on.
''The noise of the firecrackers, you know . . . these days,'' the senior officer shrugged in explanation. ''Someone could hear it and misunderstand.''
For the Israeli soldiers based in Sidon, a Sunni Muslim merchant town of 150, 000, and capital of Lebanon's south, and for the Lebanese who live there, many things have changed in a year. Last summer, despite the scars of the Israeli invasion, many Sidon merchants welcomed the Israelis as the expellers of Palestinian fighting forces from their city and as potential business partners.
But two weeks ago bazookas were fired at the Israeli headquarters (they missed) and Israeli soldiers are now forbidden to shop in Sidon stores where they once flocked for cheap electronic goods. Lebanese assailants in Sidon have on occasion fired point blank into Israeli military vehicles stopped on the road , and almost any Lebanese must now be considered a potential enemy.
Nearly two months ago Israel signed an accord with Lebanon under which it agreed to pull back all its troops from Lebanon so long as Syrian and Palestinian forces pulled back their fighters, too. But Syria has rejected the agreement.
As Secretary of State George Shultz swings through the area, Israel is now posed to redeploy its troops in Lebanon in an effort to lower casualties and its costs by shortening and consolidating its lines. The United States has so far opposed a unilateral Israeli partial withdrawal for fear that new lines will mean the de facto partitioning of Lebanon amongIsrael, Syria, and a Lebanese central government.
Sidon, situated just south of the Awali River and 45 kilometers north of Israel, is mentioned most often as the new Israeli line stretching from the Mediterranean coast inland. Both the local population and Israeli military officials are uncertain what redeployment would mean for them. ''The people here are restive and nervous,'' said one Israeli military source. ''They are not sure if their contact with Beirut will remain the same as now, or how long they will have to wait at Israeli checkpoints.''
At present traffic flows freely over the small bridge crossing the Awali on Lebanon's main coastal road. It stops at a roadblock manned by armed mili:wPsy/ he south Lebanese forces of Israel's Lebanese Christian ally, Maj. Saad Haddad. At a gas station next to the back of the rushing green-brown Awali, Israeli sold)mrs stand nervously in flak jackets, machine guns at the ready, while their jeeps tank up. Down the road, traffic rushes along Sidon's main gtreet, nearly fully recovered from the war and lined with refurbished offices, shops, and restaurants.
Israeli officials are careful to assure visitors that redeployment does not mean permanent occupation of south Lebanon. The Israeli military headquarters, situated in a lQrge three-story, H-shaped Lebanese government office building in Sidon, is pointedly called the Office for Liaison with Lebanese.
''This operation is totally different from the West Bank and Gaza (Israeli-occupied territories which include 1.3 million Palestinians),'' insisted one Israeli military source in south Lebanon. ''We are the de facto administration in south Lebanon but this is not a military administration like the West Bank.''
But Israeli military sources admit frankly that when their needs dictate it, they override Lebanese local authority. For example, the offices of the governor of south Lebanon, evicted from the building in which Israel set up its Sidon headquarters, are now scattered around Sidon. ''We do have the intention to give back the building. We did apologize to the governor,'' one Israeli military source insisted, noting the Israeli military had let Lebanese officials keep one wing of the building despite security risks.
A unit of the Lebanese Army in Sidon is forbidden to take its weapons outside its barracks or to engage in any military activities. The Lebanese Army, which is trying to recover from its disintegration over the past eight years, is the fighting force Israeli political officials hope will move into areas they want to evacuate in order to guarantee stability there. But as for the disarming of the barracks in Sidon, ''there is confusion enough in south Lebanon without another factor being added,'' explained an Israeli military source.
The biggest problem faced by Israeli forces in Sidon and south Lebanon will be to guarantee security within the new line if redeployment begins. Israeli military sources concur that most Israeli casualties are now inflicted by local Lebanese in hit-and-run attacks. Some come from Lebanese leftist groups often sponsored by outside Arab regimes, others from fundamentalist pro-Khomeini Shiite Muslims, and others are said to be in the pay of PLO men who have infiltrated back to Beirut.
With Israeli casualties in Lebanon now standing at 504 dead, 159 of them since Sept. 1, 1982, Israeli military experts are grappling for techniques to reduce casualties within shrunken lines.
One suggestion: to cordon off the new Israeli lines with fences, presumably similar to the electronic barriers along Israel's borders with Jordan and Lebanon, which are lined with patrol roads swept daily to reveal footprints of any infiltrators.
To cut down casualties, Israeli soldiers in Lebanon must now travel in convoys, wear flak jackets, and stick to their bases unless out on patrol.