THE past year has seen no progress on the Arab-Israeli conflict, specifically on the issue of the Palestinians and the occupied territories. What are the prospects for the year ahead?
The conventional wisdom is that it would be foolish to expect or attempt any movement toward a settlement. Israel, it is said, is politically paralyzed by the Labor-Likud coalition resulting from its inconclusive election and is preoccupied with its deep economic crisis. The Arabs are too divided to play an effective role, and the United States is too traumatized by its humiliation in Lebanon to press peacemaking unless success is certain. In short, conditions are just not propitious for any progress.
This diagnosis has its plausibility, yet it could be a poor guide for the US course in the Middle East. That is the message of three strong voices who argue forcefully against inaction. Two from the region speak out in the current issue of Foreign Policy.
One is Abba Eban, who was foreign minister of Israel from 1966 to 1974, and who now chairs the Knesset Committee on Foreign Affairs and Events. Decrying the lack of serious effort for peace since 1979, he asserts that US passivity on the issue now ''would condemn the Middle East to a volcanic status quo leading to a possible explosion.'' He urges the US, as the only potential agent of reconciliation, to undertake a new mediation process.
The second, Crown Prince Hassan Pin Talal of Jordan, is equally concerned about the dangers of extremism and the consequences of inaction. In his view, without a comprehensive settlement, ''the gloomy prospect that stares the Middle East in the face is that we may be plunged into an interminable internecine war that will spare no one.'' Disillusioned by the US partiality to Israel, he calls for a new Geneva conference of all interested parties, though remaining ''flexible.''
Both men, despite their differences, stress that a settlement must be based on UN Resolution 242 and its principle of exchanging territory for peace.
The third voice is George Ball in his trenchant essay: ''Error and Betrayal in Lebanon.'' His analysis of the Israeli invasion and the US role in the debacle is penetrating and devastating. His projection of the eventual consequences of continued Israeli pursuit of hegemony and of uncritical US support is grim and persuasive. And his conclusion is convincing. The US must cease to subsidize such Israeli policy as would seriously damage US interests and discredit the Israelis who want a settlement allowing Palestinians and Israelis to live in secure peace.
None of the three suggests that working out a just settlement will be easy or that success is assured. The task will be daunting. The reason for tackling it promptly is that a solution is vital for the long-term ability of the region and for the interests of the US and the West as well as of the parties themselves, and that delay is working against such a solution and making ultimate catastrophe more likely.
Despite the difficulties, there are positive elements to build on.
* Arab attitudes have evolved even though divisions persist. The moderate regimes are equally worried about the threat of extremism, which is encouraged by regional instability, and are eager for a settlement. Egypt and Jordan have renewed their ties, and both are more active in pressing for revival of the peace process. The PLO Congress in Jordan, addressed by King Hussein, implied a greater focus on the Palestinians in the West Bank and Gaza who are impatient for an end of the occupation. (The PLO rejection of UN Resolution 242 reflects the fact that it refers to the Palestinians merely as ''refugees.'')
* In Israel, the Likud leaders and supporters are undoubtedly dedicated to absorbing the West Bank and Gaza and pressing Palestinian inhabitants, even if that perpetuates Israel's isolation and Arab hostility but many Israelis do not share those aims. They are ashamed of the repression, troubled by the long-term implications for Israel's society and security, and shocked by the Lebanese adventure. They would gladly trade territory for a secure peace based on reconciliation.
* Events are forcing the US to take a closer look at its interests in relation to Israel. Lebanon raised serious doubts about their congruence with Israel's aims as defined by Likud. Now the Israeli economic crisis is focusing more attention on the scale and effects of the enormous US assistance to Israel, as the US debates its own budget cuts. The requests to increase the current level of $2.6 billion each year to $4 billion to $5 billion - about $4,000 to $5 ,000 per family - is bound to raise questions. Why should the US help Israel live beyond its means? Should the US in effect be subsidizing actions like the costly West Bank settlement or the Lebanese invasion, which damaged US interests?
The US leverage is tremendous. The question is whether the US will use it to induce Israel to shift from its policy of annexation to one based on negotiating an end of the occupation, while encouraging the Arabs toward reasonable flexibility. Despite the pro-Israeli lobby and its influence on Congress, President Reagan now has the political standing to adopt such a course if he chooses. If he pursued it with determination, he would serve the long-term interests not only of the US but of Israel as well. In doing so, he would find substantial support both at home and in Israel itself.