Washington wrestles with Palestinian policy, Mexican debt, and European allies
The past week in world affairs witnessed the shift of the Middle East problem from the battlefield of west Beirut to the corridors of Washington.
As though that were not enough for one week, the top policymakers in Washington had to cope as best they could with a sudden economic and financial crisis in Mexico while they were still struggling unsuccessfully to extricate themselves from their quarrel with their own NATO allies over the Siberian pipeline affair.
In the Middle East, the battalions of the Palestine Liberation Organization fanned out in all directions from west Beirut in their own ''diaspora.'' Fragmented and relocated farther than ever from their own original homeland in Palestine, would they still be a factor in the Middle East maneuverings over the future boundaries of the state of Israel?
Weightier than anything they can do for some time to come, if ever, is the question in Washington whether the Reagan administration will or will not accept one single, highly freighted phrase, the words ''self-determination.''
Anyone who watched Mr. Reagan's new secretary of state, George Shultz, on television over the previous weekend noticed how carefully and nimbly he sidestepped that phrase. ''Self-determination'' has become the code phrase for attitudes toward the future of the Palestinian people in Palestine.
Are they someday to emerge through the Camp David process in command of their own affairs? Or will they be obliged to live inside the boundaries of the state of Israel under Israeli law?
Washington's desire is to move from the recent fighting in Lebanon on to a renewal of negotiations under the Camp David formula to be aimed at that ''comprehensive'' settlement of the old Arab-Israel relationship which was the dream of the American team at Camp David.
Tunisian President Habib Bourguiba tossed out a proposal that all concerned go back to 1947 when the United Nations proposed that Palestine be divided into three parts: an Arab state, a Jewish state, an internationalized city of Jerusalem, and all in an economic union or common market with each other.
President Hosni Mubarak of Egypt declared that ''the United States must recognize the right of the Palestinian people to self-determination.'' In effect he said that such recognition is a condition for Egypt's return to negotiations with Israel under the Camp David formula.
He laid down as a second condition that Israel halt all ''settlement activities'' in the West Bank and Gaza, meaning no planting of new Jewish settlements or expansion of existing such settlements in occupied territory.
The Saudis have been talking again about their version of a plan that attracted Washington's interest last November but was promptly denounced by Israel. It calls, as did the original UN plan, for both an Arab and a Jewish state in Palestine. It would trade off de facto recognition of Israel by the Arabs in return for acceptance by Israel of a separate Arab state. The Camp David formula is aimed specifically at that withdrawal of Israeli troops from occupied territories which was called for under UN Resolution 242. The achievement of that withdrawal remains the official target of all parties to the Arab-Israel affair, and of negotiations under Camp David. Israel itself subscribes in theory to Resolution 242.
But what happens if and when Israeli troops pull out of the occupied Arab territories? Obviously, the Arabs who live there become masters of their own affairs and form some kind of political organization.
Israeli Prime Minister Menachem Begin committed himself at Camp David to ''autonomy'' for the Palestine Arabs in the occupied territories. But is ''autonomy'' the same as ''self-determination''? Not if Israel is to claim ultimate ''sovereignty'' over those territories, as Mr. Begin proposes to do at the end of a five-year period. And not if Mr. Begin is to continue to plant even more Jewish settlers in the occupied territories, as he has been doing from the time he became prime minister.
The situation has apparently reached the point where progress under Camp David will be possible only if Washington will accept the concept of Arab ''self-determination.'' Egypt was the only Arab country that attended Camp David. There can be no meaningful revival of the Camp David process without Egypt. But the Israelis and their friends in Washington are determined in their opposition.
Mr. Shultz says the Palestine Arabs ''should have a part in determining the conditions under which they are governed.'' But ''a part'' can be a long way from ''self-determination.'' That is where that matter stands at the moment.
The week saw quick action in Washington both by the US government and the International Monetary Fund to help keep Mexico from descending from financial crisis into economic catastrophe. Loans were arranged. Payments were deferred. As usual in such matters the economic community was quick to recognize the danger to the whole from the collapse of a single part.
According to the London Economist, the nine largest US banks have loaned to Mexico approximately 40 percent of their total capital and reserves. The Mexican debt is now at $90 billion, the largest such debt of any of the third world countries, larger by far than Poland's debt. Washington could not afford to let Mexico go bankrupt. The consequences to the US banking system would be too damaging.
As for Washington's third current problem - the pipeline - President Reagan was still sticking stubbornly to his effort to force his allies to respect his desire to block that pipeline. They were resisting. The issue had gone into the US courts. The first decision backed Mr. Reagan and was met by defiance by the allies. How long would Mr. Reagan pursue a policy that was damaging the alliance and by so doing serving a major Soviet purpose - the disruption of the alliance