The mushrooming Waldheim affair has brought Israel face to face with one of its fundamental dilemmas: How does it ensure that the Holocaust is not forgotten by the world and at the same time deal with other nations ``normally?'' The start yesterday of Israel's annual day of remembrance for the victims of the Holocaust only heightened the emotional response here to former United Nations Secretary-General Kurt Waldheim's candidacy for the Austrian presidency. At sundown, caf'es and restaurants in Israel had to close. At 8 a.m. today, wailing sirens will bring the entire nation to a halt for a minute's silent remembrance of the 6 million Jews killed by the Nazis.
Only two days ago, Mr. Waldheim garnered 49.6 percent of the Austrian vote -- all the proof some Israelis needed of Austria's unrepentant attitude toward the Holocaust and Austrian cooperation with the Nazi regime.
Waldheim served in the Balkans during World War II in a German command that deported Greek Jews and initiated reprisals against Partisans. The World Jewish Congress and others have accused him of covering up his knowledge of Nazi atrocities. Waldheim has denied the allegations. He failed Sunday to receive the necessary majority for the largely ceremonial Austrian presidency. Waldheim now faces a runoff vote next month against Socialist candidate Kurt Steyrer.
Two Israeli parliament members who also are Holocaust survivors said in an open letter to the Austrian Embassy here that Israel will have to consider breaking diplomatic ties with Austria, should Waldheim be elected. Israeli Prime Minister Shimon Peres said he has asked the Justice Ministry to gather data on Waldheim's alleged Nazi ties.
The election results were ``a sign that maybe Austrians are not yet ready to grapple with the moral effects of their history,'' said Rabbi Menahem Fogel, spokesman for Yad Vashem, Israel's institute of Holocaust research.
``We have to decide,'' said one Israeli. ``Are we really pursuing a return to the Nuremberg Trials atmosphere? The Holocaust deprived us of a third of our people. But I do not want to monopolize the Holocaust as a Jew. After all, there were 20 million innocent victims of the Nazis. Under the shock of what happened to us, we have underestimated what happened to others and regarded as a betrayal the fact that the others recovered so quickly.''
``The election of Waldheim will pose a problem -- how to resolve it is premature to say,'' said Yeshayahu Anug, head of the Foreign Ministry's European desk.
Until the day before the election, the Israeli government had kept a determinedly low profile in the Waldheim controversy. Some government officials privately described the World Jewish Congress campaign as ``overzealous.''
But in an interview published Saturday in the New York Times, Foreign Minister Yitzhak Shamir said it would be ``a real tragedy'' if Waldheim were elected.
After the Austrian election results were known, Mr. Peres said he had asked the Justice Ministry to ``collect all the data, all the accusations'' against Waldheim and prepare a legal analysis of them. ``If indeed the legal material which we collect and analyze proves that Kurt Waldheim served in the Nazi Army and acted against Partisans or Jews, we shall draw from this all the appropriate conclusions,'' Mr. Peres said in a speech.
It was the strongest statement Peres had made on Waldheim, but it left the government an out to avoid saying anything more before the runoff. Professionals at the Foreign Ministry expressed concern that Israel might directly intervene in another nation's electoral process.
``It must be remembered,'' said one official who spoke on condition he not be identified, ``that even in the darkest days of Austrian-Israeli relations, the Austrians helped us by negotiating [with Palestinians] for prisoner exchanges of Israeli soldiers and allowed Austria to be a transit point for Soviet Jews.'' The official said he did not believe that, even should Walheim be elected next month, Israel would allow its diplomatic relations with Austria to be affected.
``You do not cut off relations with a nation in the middle of Europe,'' the official said. ``Even if those Israelis who really believe that the whole world is against us were right, we must be capable of dealing with the outside world even if the whole of the outside world is against us.''
Should Israel allow itself to become obsessed with pursuit of Nazis and suspected Nazis, said Mr. Anug, the Foreign Ministry senior diplomat, ``we will stagnate, become paralyzed, and not be able to cope with the present. The concept of Zionism was to give Jews the ability to lead a normal dialogue with the outside world. It is not my ambition to judge the outside world every day.''