The New York Times, by Thomas L. Friedman

By Thomas L. Friedman

RAMALLAH, Israeli-Occupied West Bank— In December, on a quiet morning in this Christian Arab town north of Jerusalem, a 16-year-old Palestinian schoolboy walked up behind an Israeli soldier, pulled an ax out of his blue schoolbag, started shouting something about ''Palestine'' and began striking the soldier on the head.

The wounded soldier was taken to a hospital with severe cuts. The youth was taken to prison. All the army spokesmen would say about the young Palestinian was that he was acting on his ''own initiative'' - that is, no one ordered or paid him to do it; he just did it on his own accord.

This scene has been repeated several times in the last year, with young Palestinians using kitchen knives or sharpened screwdrivers to attack Israeli soldiers or civilians in broad daylight. And at Bir Zeit University north of Jerusalem in December, Palestinian students threw stones at heavily armed Israeli troops, who responded with live ammunition. Two students were shot to death, but the stone throwing continued for another week at schools all over the West Bank.

The Post-1967 Generation

These young Palestinians are members of the post-1967 generation, who have spent all their lives under Israeli rule in the occupied West Bank and Gaza Strip and are increasingly making their political views felt. Their views are important for many reasons, most notably that in the years to come, they will be the Palestinian leaders and, perhaps, negotiators.

Judging from a wide range of discussions with West Bank Palestinian high school students and teachers, as well as with college students and professors, two themes in the thinking of this new Palestinian generation are striking.

First, although only a tiny number of the young Palestinians would ever think of wielding an ax, many seem to identify clearly with the blind rage of the ax wielders. They no longer seem to view violence as serving as a means toward a particular political objective; most say that they have given up hope for any solutions. Theirs is simply a politics of revenge. Violence 'Just Occurs'

''I think that our generation of Palestinians have reached a point psychologically where we want any means of getting back at the Jews,'' said Meral, an 18-year-old Palestinian student at Bir Zeit University who did not want to give her last name, in order to avoid repercussions. ''You just get the feeling the Jews want to aggravate us. Palestinian violence now is something that just happens. It's not planned; it just occurs.''

Sara Salah, principal of the girls' high school in the Aida refugee district near Bethlehem, said, ''My students' main problem is that they don't like their lives with the Jews.''

The second striking feature about the new generation of Palestinians is that although they have had more direct contact with Israel and Israelis than previous generations of Palestinians, the experience in the occupied territories has done nothing to moderate their feelings. If anything, it has radicalized them.

Conventional Wisdom Belied

This Palestinian generation seems to belie the conventional wisdom that the problem with the Arabs and the Israelis is that they do not know each other. Many of the young Palestinians say they believe the problem is that they and the Israelis do know each other, and that each wants the same land free of the other.

''We are two generations that are basically brought up the same way,'' said Serene, a 20-year-old Bir Zeit student who is studying literature, speaking of her Israeli and Palestinian peers. ''They are a generation brought up to hate the Palestinians, and we were brought up think the same about them. We don't need to talk to them to know what they are thinking because we know that they were brought up to think the same way as we do - only opposite.''

''I was driving on the road from Jerusalem to Jericho one day last year and was stopped at an army checkpoint,'' she added. ''We were there for a while, and at one point an Israeli soldier started trying to talk to me. I wasn't very friendly. Finally, he said to me, 'You hate us, don't you?' I said, 'What do you think?' '' 'Not Going to Condemn Him'

''I would not go out and kill an Israeli civilian myself, but I also would not condemn someone who does,'' Serene said. ''They are killing so many of our civilians here and in Lebanon, if someone has the guts to go out and stab one of theirs, I am not going to condemn him.''

Another indication of how little living together has led to any deeper appreciation of the other's point of view is that these young Palestinians almost never refer to Israelis as Israelis. Instead, they call them the ''Jews.''

It appears from discussions that they believe that referring to Israelis as Israelis would be to acknowledge that there is another legitimate national collective on the land. So instead, they refer to them only as Jews, with no national connotations.

When this is pointed out to them, they quickly note that many Israelis do the equivalent to them, referring to them not as Palestinians but as ''the Arabs of the land of Israel,'' an amorphous ethnic group living in someone else's country.

It seems that neither side can stand the symmetry of acknowledging that there is another legitimate collective on the land, because to do that would be to relinquish some of the exclusivity of their own claim and make their own ''rights'' relative instead of absolute.

Losing Control of Future

The most important factor shaping the attitudes of the new generation seems to be the feeling that they have lost control over their own future, as individuals and as a collective.

Because of the Israeli occupation, their opportunities as individuals are highly restricted. After they graduate, they cannot obtain a license to start a new business if it competes with an existing Israeli industry. There are few interesting Government jobs available to them, because virtually all are controlled by Israelis. They can leave to look for work in Jordan or the Persian Gulf, but under Israeli regulations any male between the ages of 16 and 26 who leaves cannot come back for at least nine months. The regulation was imposed to prevent gun-running and to encourage settlement abroad.

One of the paradoxes of the last 20 years is that it was the Israelis who, by offering many employment opportunities to West Bank Palestinians in manual labor inside Israel, created a huge Palestinian middle class that could afford to send its children to colleges and technical schools.

When the West Bank was under Jordan, there was only a tiny middle class, and the mass of the population was composed either of peasant farmers or landed gentry. Historically, it has been the middle classes who have most often had the sophistication and the motivation for serious upheavals.

Today, according to the Center for Palestinian Studies, an Arab research organization in Jerusalem, there are 17,000 Arab youths in the West Bank and Gaza studying at 20 post-high-school institutions. Many of those who graduate from these institutions, however, never end up working at what they were trained for. A Sense of Identity

Their frustrations derive from the Palestinian identity that has been shaped in the West Bank in the last 20 years of Israeli occupation.

Under the Jordanian occupation, Palestinians were never quite sure what their identity was. Their passports were issued by Jordan, and they were represented in the Jordanian Parliament; but although some thought of themselves as Jordanian nationals and assimilated into Jordanian society, many others viewed themselves as Palestinians and resented the Jordanian attempts to play down their separate identity.

Under the Israeli occupation, by contrast, they no longer had an option of assimilating. The challenge of the Israeli occupation, coupled with the rise of the Palestine Liberation Organization and the collapse of Pan-Arabism as a predominant ideology after the 1967 war, all combined to forge a Palestinian national consciousness among West Bank youth.

''Between 1949 and 1967, whenever anyone asked me what I was, I always hesitated,'' said Munir Fasheh, Dean of Students at Bir Zeit University, who grew up in Ramallah. ''Legally, I was Jordanian, but emotionally I was Palestinian. Now, there is no kid on the West Bank under the age of 25 who has ever experienced anything other than being a Palestinian. When you consider that 60 percent of the West Bank population is under the age of 20, it means that for three-quarters of them Jordan is something that doesn't exist.''

But under the Israeli occupation, this Palestinian political identity is not allowed to find expression in political parties, political assembly or self-rule.

Israel, Jordan and the United States are trying to help King Hussein reassert his traditional influence over the West Bank and to undermine the P.L.O.'s popularity there, in hopes of being able one day to arrange a Jordanian-Israeli solution.

'60 or 70 Years Before Victory'

This policy, however, seems to be in contradiction with the mood among the young generation, whose attitudes about peace have been shaped almost entirely by the P.L.O.

''For tomorrow, we want the West Bank and Gaza, with the P.L.O. in charge,'' said Abdullah, a 23-year-old engineering student at Bir Zeit. ''For the day after tomorrow, we want a democratic, secular state in all of Palestine, so that the Palestinians from Haifa and Jaffa can go back home. I estimate 60 or 70 years before victory.''

Zuhad, a veiled 20-year-old Moslem fundamentalist who is majoring in linguistics, said: ''I want an independent state in all of Palestine by armed struggle. Why not all tomorrow? They took it with armed struggle, so we'll get it back with armed struggle.''

As for the future of the Israelis, Serene said: ''Don't worry - we are not going to throw the Jews into the sea. It is just that Jews are a religion, not a nationality. All those Jews who were here before 1917 can stay. Those who came later will have to return to the countries they came from.'' But what if they cannot? ''I think they can,'' she said.

The Israeli authorities are not unaware of the hard-line views of many educated Palestinian youths. They tend, however, to view the hard-liners as a minority elite that has intimidated, or out-talked, a majority who only want to be left in peace and accommodate with the status quo.

''Maybe we are are talking about 12,000 students who are now intensely pro-P.L.O.,'' said a top Israeli Army officer in the West Bank administration. ''We assume that whatever solution will be achieved here, this group will be out in the streets opposing it.''

Arafat Is Still a Hero

Moreover, the officer said, when these youths grow up and have to get jobs they will moderate their views, both because they have matured and because Jordan and Israel together control most of the employment opportunities in the area.

But others say this could lead to more frustration rather than more stability.

It is hard to sit with young people anywhere in the West Bank today and not find them expressing support for Yasir Arafat, the P.L.O. chairman.

This may seem incomprehensible, in that Mr. Arafat has only losses to show. But it seems that the more he loses, the more the young Palestinians identify with him as someone who, like themselves, is caught in a vise between Israel and the Arabs.

''Arafat is like the stones we throw in demonstrations,'' Meral said. ''When we stand against the Jews, all we have is this stone. He may be weak in what he can do, but he is the symbol of the Palestinians. He is the stone we throw against the world.''

By Thomas L. Friedman

UMM AL-FAHIM, Israel— In this Israeli Arab village about an hour's drive north of downtown Tel Aviv, Israeli Moslem fundamentalists have just erected new bus stops with separate seating areas for men and women, in strict observance of Islamic piety.

Down the road a few miles, at Yunis's Restaurant, once a favorite Arabic eatery and watering hole for Israeli Jews, Yunis recently stopped serving hard liquor and beer in deference to the surge in Islamic fundamentalism in the nearby Israeli Arab villages.

But perhaps it is the new style of soccer games that really leaves the visitor feeling at times that he is in Saudi Arabia, not Israel. Last September, a group of observant Israeli Arab Moslems withdrew from the Jewish-run league and formed their own 38-team soccer league, representing Arab villages from across Israel.

Their games look like any other, except that it is not only the referee's whistle that brings play to a halt. When the muezzin's wail carries across the field from a nearby mosque, both teams stop, line up, face Mecca to the southeast and kneel in prayer, with their white tennis shoes forming a neat, if incongruous, row behind them. When prayers are over, play resumes.

Stirring in the Land, Home-Grown Fervor

The Islamic revolution has come to Israel.

From Israeli Arab villages in the northern Galilee, to the turbulent Palestinian universities in the Israeli-occupied West Bank, to the teeming refugee districts of the Israeli-occupied Gaza Strip, an Islamic revival is taking place among Moslems living under Israeli control.

The revival was inspired in part by the Iranian revolution led by Ayatollah Ruhollah Khomeini. But it is also a home-grown movement of Palestinian Moslems seeking strength to confront Israel by returning to their classic Islamic identities that once brought them grandeur.

The Islamic movement is bringing some Israeli Arabs and some West Bank and Gaza Palestinians much closer through the common bond of a resurgent faith. At the same time, Moslem associations are attracting many adherents among Palestinian youths, and they are becoming a major challenge to the secular Palestine Liberation Organization, led by Yasir Arafat.

Most important, the Islamic revival in Israel, coupled with the religious-nationalist upsurge among some Israeli Jews since the 1967 war, is beginning to transform the nature of the Arab-Israeli conflict. The Israeli claims to a ''Greater Israel'' are now increasingly met by Moslem demands for an ''Islamic Palestine.''

What this means for the already intractable Arab-Israeli conflict, said Eli Rekhess, a Tel Aviv University expert on Israeli Arabs, is that future ''coexistence will be that much more difficult and the lines of differences between the two communities that much sharper.''

Genesis of Revival: The '67 Israeli Victory

About 600,000 Palestinian Arabs live in Israel and 1.3 million in the occupied territories; 92 percent of them are Sunni Moslems, and 8 percent are Christians. There are virtually no Shiite Moslems, who predominate in Iran.

Although the Islamic revival is still a minority phenomenon among these Palestinian Moslems, it touches very deep chords in the wider secular Moslem population, and its leaders have the credibility and potential power to exercise disproportionate influence over Palestinian politics.

Most Israeli Jews have no idea that in the quaint and seemingly sleepy hilltop Arab villages of the Galilee, which they drive past every day on visits to kibbutzim, an Islamic fundamentalist movement has been building since 1967.

Before 1967, there was no advanced Islamic teaching center in Israel. But, paradoxically, through the victory of the Israeli Army in 1967, Israeli Arabs found themselves back in contact with the Moslem holy places in Jerusalem and the centers of Islamic learning in Hebron, Jerusalem, Nablus and Gaza.

Seated in the spartan office of the Islamic Association of Umm al-Fahim, an Israeli Arab village in the lower Galilee at the center of the Islamic revival, Sheik Hashem Abdel Rahman Mahajani, 27 years old, explained its origins. On the wall was a map of Israel, marked ''Islamic Palestine 1948,'' which did not show Jewish settlements.

''Before 1967, we were cut off from all Arab and Islamic culture - we almost became Jews,'' he said. ''There was nowhere to study religion. When the West Bank was opened, we learned a lot about Islam. All our religious books came from the West Bank and Gaza, and many lecturers.''

In mid-April, the senior Moslem cleric of Jerusalem, Sheik Saad e-Din al-Alami, the Mufti, who before 1967 could not contact Israeli Moslems, went to the Israeli town of Beersheba, unfolded woven prayer rugs outside the municipal museum and led some 20 Israeli Arabs and Bedouins in prayer. The Beersheba museum was, until 1948, a Turkish-built mosque, and the local Moslems have enlisted Sheik Alami to help them get it back.

Sheik Mahajani said he himself grew up in a traditional but not overly religious household. When he graduated from high school a decade ago, one of his teachers suggested he go to Hebron Islamic College in the West Bank. There, he earned a bachelor's degree in Islamic religious studies, then returned to his village in Israel to teach others. 

He said another important external fillip for the Israeli Moslem revival had come, unexpectedly, from the peace treaty with Egypt, which opened Israeli Arabs to influences from Islamic centers in Cairo.

''Today,'' Sheik Mahajani said, ''I know all of the developments of the Islamic world by reading the Egyptian newspapers and magazines.''

A New Generation Tries a New Path

The Islamic revival in Israel turned from a cultural to a political phenomenon with the Iranian Islamic revolution of 1979 and the coming of age of a new post-1967 generation of Israeli Arabs, who sought to express their awakening Palestinian Arab identities and distinguish themselves from Israeli Jews and the Westernized culture epitomized by Tel Aviv.

''Within Israel, the Islamic revival is not a movement of the uprooted,'' said a Hebrew University expert on Islam, Emanuel Sivan. ''Rather, it is middle-class people and their children reaffirming their identity as Moslems, above all else, and aspiring to liberate Palestine as a Moslem land.''

This potent mix of cultural, religious and nationalist elements was clearly behind the first serious Islamic revolutionary movement in Israel, known as Usrat al-Jihad, or the Family of Holy War, led by a dynamic young sheik named Abdullah Nimr Darwish from the Israeli Arab village of Kfar Qasem, near Tel Aviv.

Organized in the late 1970's, Usrat al-Jihad reportedly advocated sabotage and violence against Israeli and secular targets. It was uncovered by the police before it had done much damage, and in 1981 Sheik Darwish and 56 followers were imprisoned.

Upon his release in 1984, he and his followers in the Arab villages of Israel organized themselves into a loosely connected Islamic Association to work for peaceful change in Islamic society in Israel.

Sheik Darwish was recently interviewed in his office in Kfar Qasem, where the Israeli authorities have him temporarily under town arrest.

''After I got out of prison, I tried to find a new way,'' he said, trying to explain how he now justifies working peacefully to advance Islam in a nation under Jewish control. ''I found the answer in Islamic history in the story about the Moslems who lived a Moslem way of life in Ethiopia under the Christian emperor. The Prophet Mohammed approved their conduct. We consider ourselves like them.''

The sheik repeated over and over again, as if for hidden ears, that his organization works ''only through education, culture and social reform to give every Moslem here back his identity.'' Nonviolent Approach: Mosques Spring Up

Motivated in part by Sheik Darwish, and in part by other dynamic local village preachers, the Islamic revival in Israel has adopted this nonviolent approach.

The fruits of their labor can be seen in the Arab villages of northern Israel where spanking new white-stone mosques are sprouting across the horizon. In Umm al-Fahim, a village of about 5,000 people, seven mosques have been built in the last 10 years, after decades in which there were only four.

Moslem fundamentalists have also won control or influence in the local councils of several Israeli Arab villages, such as Fureidis, Kfar Bara and Kfar Qasem, in local parties with names like Al Huda (Guidance) or Islah (Islamic Reform).

The Islamic Association in Umm al-Fahim, as in other villages, has organized Moslem youths into work brigades, which build roads, mosques, clinics and Islamic-style bus stops.

In Kfar Qasem recently, Sheik Darwish organized the building of a three-story kindergarten in three days. Villagers worked in shifts around the clock in a festival-like atmosphere, while a microphone blared out from the top of a mosque the donations of various families. These included truckloads of sand, $50, a gold ring and even one shekel (65 cents) from a young boy who donated his ''ice cream money.''

In many Israeli Arab Moslem villages, the Parent-Teacher Associations have been taken over by orthodox Moslems, who have arranged for the schools to give greater emphasis to Islamic history, and even to run competitions for knowledge of the Koran, Sheik Hashem said.

Today, about 25 percent of each girl's high school class in Umm al-Fahim and nearby villages wear head coverings and conservative dress, ''and there is a steady increase every year, praise be to Allah,'' Sheik Mahajani said. A decade ago, there were virtually none.

No Pictures of Arafat, No Use for Khomeimi

Although they insist they are apolitical and only religiously and culturally oriented, the literature of the Israeli Moslem revivalists says otherwise. Their main journal, Al Serat, edited by Sheik Darwish, has a heavy dose of Palestinian nationalist slogans and stories about sheiks who were ''martyred'' for Palestine. Nowhere does Mr. Arafat's picture appear.

Ayatollah Khomeini, who was initially looked upon as a role model, now appears to be totally discredited in the eyes of Israeli Moslems - not because he is a Shiite and they are Sunnis, but because of the way they view the Iranian revolution as having devoured its own children and divided the Islamic world.

''In the beginning, when Khomeini first appeared, we saw him as a rising sun in the sky,'' Sheik Darwish said. ''But today, he is not a sun, not even a moon. He is just a darkness.''

In the Gaza Strip, the Islamic revival has also been building strength since 1967. The number of mosques has grown in 20 years from 75 to 150. Many religious young men in the Gaza Strip now play soccer in long pants and swim on the segregated beaches in conservative knee-length shorts. And there has been a return to such traditional practices as the use of the suwak, a small wooden peg with a serrated edge made from a palm branch that the Prophet Mohammed was said to use to brush his teeth.

On several occasions recently, Islamic militants in Gaza have tossed nitric acid on secular women who were thought to be exposing too much skin. When The Jerusalem Post asked an observant student at Gaza Islamic University whether her long dark robe and head covering were not terribly hot, she said, ''It's hotter in hell.''

It was in trying to explain the Arab world's defeat in the 1967 war, said Mohammed Siam, the president of Gaza Islamic University, that many Gaza Palestinians, like many Egyptians, turned back to religion, interpreting the 1967 loss as a result of deviations from Islam.

Dressed in a traditional red-checked Arab headdress and twirling a strand of red worry beads around his thumb, Mr. Siam said: ''The 1967 defeat pushed people to ask themselves: 'Why were we conquered? We are many and the Jews are few.' One answer was that we were empty - no faith in the heart. To be strong is to have courage. The Arabs did not have enough faith to stand on their feet.''

What Comes First: Bullets or Belief?

Opened in 1978 with the help of Al Azhar Islamic University in Cairo, the Gaza Islamic University now has 5,000 students, including six Israeli Arabs, learning religious and secular subjects with every lecture repeated twice -once for women in their separate classrooms and once for the men. It is the only institution of higher education in Gaza.

For years the Israeli authorities were believed to be giving the Moslem Palestinian organizations in Gaza a wide berth to organize, hoping that this would promote fighting among Palestinians and help the Israelis gain strength at the expense of the Palestine Liberation Organization under Mr. Arafat.

An angry pro-P.L.O. Palestinian educator from Gaza said: ''For the fundamentalist, the Land of Palestine is not an end in itself. We say first the home, then the religion. They say first religion and then the home.''

The fundamentalists, with ample money from Saudi Arabia and other Persian Gulf countries, are now almost as strong a political force in Gaza as the P.L.O., regularly prompting street fights and campus brawls between the two groups. Israel may soon regret having shown them any leniency.

''First you have to build belief,'' a Gaza University professor said. ''Once that is strong enough, the gun can be carried and no power on earth can stop you. Empty people will always turn their backs to the gun. Full people will face it with their chests because they know that if they die, they go to paradise and if they live they will have victory - but either way they win.''

But what would Palestine look like the morning after such a victory? Neya, a 20-year-old Gaza Islamic University student council leader, explained, beginning his remarks with the Koranic introduction, ''In the name of God the Merciful and the Compassionate.''

''In Islamic history there is a grandeur,'' he said. ''Palestine will be like the other Islamic states in history. And because it will be run by the teachings of Islam, it will have room for every faith, Jews or Christians. Islam is known for its tolerance.''

Some more secular residents of the Gaza Strip find this revival oppressive. A Palestinian educator from Khan Yunis said: ''Two years ago I had a wedding in my home for my eldest son. We had a traditional Palestinian band from the West Bank and served alcohol. I needed to call 21 of my cousins to come and stand outside the apartment to protect the wedding party from the sheiks who wanted to come and break it up.''

Where It All Began: Students and the Poor

No one has any doubts about when the Islamic revival began in the West Bank among students, young villagers and poor refugees.

In the 1978 student elections at Bir Zeit University in the West Bank, the Islamic fundamentalist bloc won about 3 percent of the votes, with P.L.O. groups taking virtualy all the rest. In the 1979 student elections, soon after Ayatollah Khomeini's revolution in Iran, the Islamic bloc won 43 percent of the votes.

''Students looked at the Iranian revolution and said, 'Wow, Islam works,' '' a Bir Zeit professor said. They asked themselves why, if Iranian Moslems armed only with faith could overthrow the American-supported Shah, they could not prevail over Israel.

At a recent rally by the Islamic student bloc at Bir Zeit, 400 students gathered in the parking lot to chant in unison verses from the Koran. The rally ended with everyone shouting, ''I am a Moslem! An Arab! A Palestinian!''

A secular student observing the scene remarked, ''It is kind of scary.''

The Bir Zeit professor, a graduate of an Ivy League college, said: ''If I were younger, I would go fundamentalist. When I was growing up, Nasser was the symbol of hope for ordinary people. But the 1967 war broke him. Then the P.L.O. came along, and it captured the imagination of the youth. But the Lebanon war broke it, at least for some.''

''So now young people have turned to something that the Israelis can never break,'' he continued. ''Islam cannot be broken. The Israelis can uproot my trees or burn my house, but they can't take Islam away from me. I am right. They are wrong. God is on our side.'' A young black-bearded Islamic student leader, when asked by an Israeli about the future of the Jewish presence in this land, said: ''You will not be here. We will fight until you leave the land which you defiled. Then we will cleanse the Temple Mount with rose water, just as we did after the Crusades.''

One of the most senior Israeli officers in the West Bank was talking recently about how the chant ''God is great!'' now increasingly competes in Palestinian demonstrations with P.L.O. slogans and what this renewed devotion to the religion of the Prophet Mohammed portends.

''When I go into Palestinian homes,'' the Israeli officer said, ''I always look to see what they have on the walls. Often it is a picture of Yasir Arafat and then some Islamic sayings. So I ask myself, what happens when Arafat goes? Who replaces him? I don't think it is going to be one of his deputies. Arafat is a symbol. I am afraid it is going to be Mohammed, and you can't bring Mohammed to a Geneva peace conference.''

There was a striking incident in the West Bank recently that may have been just an accident, or may have been a glimpse of the future.

Late at night, a young Palestinian was coming toward the Jewish settlement of Qiryat Arba, outside the West Bank town of Hebron. The Palestinian was carrying a small dark object in his hand. The guard thought the youth was carrying a grenade, and when he failed to heed a warning to halt, the guard shot and wounded him.

As the guard carefully approached the wounded youth, he discovered what was in his hand.

It was a Koran.

By Thomas L. Friedman

ARIEL, Israeli-Occupied West Bank— Ron Nachman's critics call him a one-man obstacle to peace. His neighbors just call him Mayor, friend and ''hey, you.'' He calls himself a simple pioneer for the Likud bloc, Israel's large nationalist party.

Mr. Nachman is the Mayor of one of the fastest-growing Israeli towns in the West Bank. With all the discussion these days about an international peace conference on the Middle East, and Israel's possibly ceding part of the West Bank to Jordan, Mr. Nachman recently invited an American for a tour and what he called ''a dose of reality.''

Whatever foreigners may think of Mr. Nachman's version of reality, it is widely shared among the 65,000 Jews in the West Bank, and it will be widely aired in Israel if an international conference is ever held.

The Mayor began his tour by rolling out huge color aerial photographs of Ariel, in the heart of the West Bank about an hour's drive north of Jerusalem. Brimming with enthusiasm, his voice constantly had to compete with the din of jackhammers and earthmoving equipment outside his door.

''Do you have any idea how big Ariel is?'' asked Mr. Nachman, one of the founders of the nine-year-old town. ''It is 12 kilometers wide,'' or about seven and a half miles. ''That is almost the same width of the state of Israel at its narrowest point before the 1967 war. Did anyone ever tell you that?''

Plan for 100,000 People

Actually, that 7.5-mile span refers to the total area zoned for Ariel's projected 100,000 residents. Only the core of it is settled now, with 6,000 Jewish residents, 3,000 of them under 18.

On the eastern boundary, though, a high-tech industrial park is rising, and on the western edge an industrial zone employing several thousand people is already in operation. For now, most of Ariel's residents work in Tel Aviv.

''Everyone is speaking about an international conference and territorial solutions but they don't know the reality,'' Mr. Nachman said in a voice laced with contempt. ''Abba Eban? He's never been here. Shimon Peres? I think he was here three years ago. Yitzhak Rabin? I don't know when he was here last.''

''They have no feel for what is happening here,'' he said, hopping into his car for a tour. ''Action, action, action, all the time. Peres can speak and speak and speak, but we do.''

The first stop was the shopping center - about 20 businesses ranging from high fashion to hamburgers. Down the road was a tastefully designed swimming club, where the bright grass and the blue Olympic-size pool contrasted sharply with the sand-colored houses and rocky hills in the background. 'We're a Town and I'm a Mayor'

''In the Western media they are always calling us 'settlements,' '' complained Mr. Nachman, a 44-year-old industrial engineer and fourth-generation Israeli. ''We're not a settlement. That has a negative stigma. Sounds like a bunch of fanatics. We're a town and I'm a Mayor. We're normal. We're Yuppies. We have four schools and nine day-care centers. You call that a settlement?''

''We are a liberal, non-fanatical, pluralistic community - 90 percent secular and 10 percent religious, 60 percent Sephardim, 40 percent Ashkenazim,'' he added. ''We are just a cross-section of average Israel, a real melting pot.''

Part of the high-tech park is already leased to Israeli software and computer research and development companies, who will get tax breaks from the Government for setting up shop here. Along the boundary of the park, Mr. Nachman pointed out rows of neatly planted young olive trees growing in steel barrels.

''If land is cultivated, then it is private property and not state land and it cannot be expropriated,'' he said. ''If we try to move left or right, they block us with olive trees.''

Mr. Nachman swung his car down a narrow asphalt road to the Arab village of Salfit, Ariel's sister city, so to speak. Young women and a few old men milled about in the quiet streets, amid the old stone houses built along the contours of terraced slopes - in stark contrast with Ariel, which is built on a bulldozer-flattened hilltop. A Wave From the Barber

''It is empty here during the day -all the men are working in Tel Aviv,'' Mr. Nachman said. At one point he brought his car to a halt in front of the village barber shop, tooting his horn twice. The barber lifted his razor from a man's lathered chin and gave a friendly wave.

''This is my barber,'' Mr. Nachman said. ''I'm not afraid to risk my neck putting it under his razor.

''We don't have problems with the Arabs; we have problems with the Jews. Some Israeli leftists call us an 'obstacle to peace.' They don't understand that the more Ariel grows the sooner peace will come, because the sooner the Arabs will realize that they better move fast and settle with us before they lose their chance.''

The tour swung west to the industrial park, where large factories, including one from the Government-owned Israel Military Industries, are already up and others are being put together in prefabricated pieces.

Admiring the cranes lifting a prefabricated slab into place, he said: ''Look at that roof. It wasn't there yesterday. Working. Working. Another 30 more factories coming. All private enterprise. Who said there is no pioneering in Israel today?''

As he headed back to his office, the tour over, a cement-mixer truck almost squeezed his car off the road. Mr. Nachman barely flinched. ''I love those big trucks,'' he said. ''I love that concrete.''

By Thomas L. Friedman

BNEI BRAK, Israel— Until six months ago, Shimon Tsimhe had the hottest newsstand business in Bnei Brak - before the bombing. Now he ekes out a living selling falafel sandwiches.

''I used to sell lots of newspapers -lots,'' Mr. Tsimhe said nervously, looking over his shoulder. ''But there were threats.''

''They told me it would be better if I didn't sell newspapers,'' he added. ''They said it would be better if I sold falafels.''

Center of 'Ultra-Orthodox'

Down the street in this Tel Aviv suburb, a center for the deeply religious Jews generally referred to here as the ''ultra-Orthodox,'' Leah and David Green's newspaper kiosk also did a brisk business selling daily Israeli newspapers - before the bombing.

They still sell secular papers, but quietly, through the backdoor, with the stealth that a small-town American drugstore might use to sell Playboy or Penthouse.

Mr. Tsimhe and the Greens, who are all Zionist religious Jews, had their shops damaged by a group of deeply Orthodox Jews who reject the modern state of Israel, from its army to its newspapers. They have either bombed or intimidated virtually every news seller in Bnei Brak into removing all daily Israeli papers from their shelves. A Religious Power Struggle

The Bnei Brak newspaper war is symptomatic of a national religious power struggle under way in Israel. At stake is who will determine the Jewish religious character of Israel.

Will it be the non-Zionist ultra-Orthodox, who do not see in the reborn state an event of major religious significance and who believe instead that a Jewish state will be worth celebrating only after the Messiah comes and the rule of Jewish law is total? They make up about 5 percent of the population.

Or will it be those Zionist Orthodox Jews who see in Israel's creation an important religious event and believe that Judaism, when reinterpreted for the 20th century, can flourish in a modern state? These Jews make up about 15 percent of the population.

If recent trends are any indication, religious and political power among Israel's strictly observant Jews is gravitating to the non-Zionist minority, while the Zionists are increasingly on the defensive. If this trend continues, it will have a major effect on Israeli society and on Israel's relations with Jews overseas.

''American Jews, who have often been concerned about rising Christian or Moslem fundamentalism, must recognize that a serious Jewish fundamentalist revival is gaining strength in Israel as well,'' said Daniel J. Elazar, an expert on religious politics.

The nonreligious Israeli majority, represented largely by the Labor Party and the Likud bloc, is watching and waiting to make political deals with whatever religious parties emerge strongest and most able to deliver votes in exchange for concessions on religious issues.

Although there has been a strong ultra-Orthodox community in this land since before the Zionists immigrated, these people, who are known in Hebrew as Haredim or ''those who are God-fearing,'' always lived secluded from the rest of the society. Until recently, they made little attempt to integrate or dominate. But in the last few years, according to Menachem Friedman, a Hebrew University expert on Haredi society, ''the Haredim have begun to feel confident enough to present themselves as a real alternative model to the 'evil' modern society of Israel.''

The majority of Haredim in Israel, who include Hasidic sects related to those in the United States, do not engage in the violence that has taken place in Bnei Brak. Rather, their new-found active role is channeled through peaceful means.

'The Past is Ours; The Future is Ours'

One symbolic effort has been a recent attempt by Haredi yeshivas to ''convert'' Israeli fighter pilots, who are widely considered to be the elite of the Israeli military and society, into giving up their wings and taking up a life of Torah study. Nearly a dozen pilots are reported to have quit the air force under these conditions, and their pictures have quickly been put up on posters in religious neighborhoods as signs of success.

''Slowly, slowly I see every day more and more people in the land of Israel having the knowledge of God,'' said Rabbi Menachem Porush, a 72-year-old leader of the Haredi party Agudat Israel.

''When I look at my great-grandchild, I say to myself: In 20 years he will live in a real holy land, with a real holy people. It will be a different parliament from the one we have today. Remember, the past is ours; the future is ours. We just have to bridge the present.''

What distinguishes the Haredim from other Israeli Jews is not only their dark black coats, long sideburns and black fur hats, which they wear just as their ancestors did in 17th-century Eastern Europe, but also their conviction that the Zionist revolution has not constituted any important change in Jewish life. That life, they feel, is ideally practiced today in its Orthodox form just as it was 100 or 1,000 years ago.

They do not celebrate Israel's Independence Day. For them, independence day is, as it always was, Passover, which marks the Jewish liberation from Egypt 3,000 years ago.

The Haredim believe that it was loyalty to the Torah and its religious code for living, not nationalism, that kept the Jews alive through the ages and gave meaning to Jewish communal life. They see Zionism, with its avowed aim of making the Jews ''a nation like all other nations,'' as destroying the singular religious identity of the Jewish people.

The Haredim seek to justify not serving in the Israeli Army, while enjoying the security that it provides from hostile Arab neighbors, by arguing that they too are protecting the country by keeping the ''authentic'' Jewish heritage and spirituality alive.

Roots That Predate The Israeli State

While nonreligious Israelis may feel their ways of life threatened by Haredi demands to close movie houses, remove pictures of bikini-clad women from bus-stop advertisements or ban soccer games on Saturdays, the Haredim see things differently.

Many have family roots in Israel that date long before the first Zionists arrived, when the only Jews who lived here were religious. In their view it is their way of life that has been besieged by modern Israeli society, said Rabbi Porush. His family has lived in Israel for eight generations.

When Israel was founded 39 years ago, the secular Zionist majority was ready to accept the Haredi groups because they reminded them of their grandfathers and because the Zionists felt certain that these people, speaking Yiddish and dressed in Eastern European attire, would wither away in a generation.

According to the Jerusalem Institute for Public Affairs, the average number of children in Haredi families is 8, compared with 3.5 for religious Zionists and 2.2 for secular Zionists. The majority of new immigrants today are deeply Orthodox Jews from North America and Western Europe, while Western liberal Jewish immigrants are a mere trickle.

''I just read that 250,000 Israelis are living in the United States,'' Rabbi Porush said. ''I can tell you that none of those leaving are religious Jews. The Zionists say Israel should be a nation like all others. So if things don't work out here, they just go elsewhere. Our people are coming here and staying here because this is a holy land, and only here can you fulfill certain commandments of the Torah.''

In the 1977 elections, the Zionist National Religious Party won 12 seats in Parliament; today it has four and in the next election could hold even fewer. The ultra-Orthodox party Shas, which did not exist in 1977, has four seats today, and Agudat Israel has two.

Gaining Ground As Religious Leaders

The Haredi communities have been gaining strength not only through numbers, but also through religious leadership.

What they have done is to establish their own rabbinical courts and religious authorities, believing them more observant and knowledgeable about religious affairs than the state-appointed Chief Rabbis or Zionist religious parties.

In their view, the notion of a chief rabbinate appointed and paid by a secular state is repugnant to the traditional Jewish notion of the rabbi whose authority grows from his own piety and knowledge.

For example, the Chief Rabbi's office is responsible for deciding what food is kosher, but the Haredim will eat food only if their own rabbis have stamped it ''strictly kosher.'' The Israeli press recently reported about a salt factory that has five rabbis at the end of its production line, some from the Chief Rabbi's office and some from the Haredi community.

The Haredi rabbis have told the management of some luxury hotels that they will hold bar mitzvah and wedding celebrations there only if the hotels hire Haredi rabbis to supervise their kosher kitchens. The hotels have generally agreed, because by hiring such a rabbi they can open up a new, growing market and not lose the other more moderate religious markets, whose members also recognize Haredi kosher supervision.

Once a hotel is signed up, the Haredi rabbis go to their suppliers and explain to the butchers and bakers that if they want to continue selling to the hotels, they will have to adopt Haredi kashrut supervision. This process goes on down the line of suppliers.

'We Have One Flag: The Torah'

The Haredim have also used their influence to affect how Israelis study their traditions and educate their children.

As a result of the Haredim's devotion to Jewish learning and the building of new yeshivas, they and their rabbis, not the religious Zionists, now set the standards for what it means to be a ''talmid hacham,'' or learned Jewish scholar.

The religious Zionists have ''lost their way,'' Rabbi Porush said. ''They carried two flags, one of nationalism and another of Torah. They were always torn between the two. We have one flag: the Torah. That is why the power is in our hands now.''

The Israeli Government runs a network of Zionist religious schools, which educate about 30 percent of the country's youth, conduct prayers in the classroom and teach religious and secular subjects.

But in recent years these high schools have found themselves short of religious Zionist faculty and have sought help from the growing number of learned Haredim to teach their children religious subjects. As a result, the state religious schools today have many faculty members who do not believe in the state of Israel or the possibility of integrating Jewish tradition with modernity.

''In the old days, the principals of the state religious schools looked to the Zionist National Religious Party for spiritual guidance,'' said Eliezer Shmueli, former director general of the Ministry of Education. ''Now many of them look to the Haredi rabbis.''

''For a long time we watched this happening very passively,'' said Yehuda Ben-Meir, a leader of the religious Zionist camp. ''We tolerated it because we may have had a hidden inferiority complex that the Haredim really were more religious than us. When they were proselytizing secular Jews, we thought it was fine, but when they started taking our own children and questioning the religous legitimacy of our own yeshivas, it was too much. We have started to fight back.''

The Issue Only: A Religious Agenda

Because the Haredim now dominate the religious bloc and because the religious bloc in Parliament holds the balance between Labor and Likud, it is the Haredim whom the secular politicians are increasingly seeking to placate.

''The Haredi politicians know how to play the political game very well,'' Mr. Elazar said. ''They know how to work the halls, build alliances and to use the system to their advantage. While they take an interest in secular issues, they mainly focus on their own religious bread and butter.''

Unlike the Zionist National Religious Party, which was ready to compromise with the secular majority on some issues of synagogue and state, the Haredim used their power in Parliament for one purpose only - to get the Israeli democratic state to accept their religious agenda.

''The Haredim live in ghettos,'' Mr. Ben-Meir of the National Religious Party said. ''They don't come in contact with the secular population and they don't care about them. All they care about is keeping their own people happy, and the more extreme they are, the happier they are.

''The religious Zionists like us come in contact with the rest of the public -at the university, at work and in the army. So while we never compromise on basic religious values, we are ready to make political compromises in order to live together.'' A Bitter Fight Over Farming's Sabbath

This was illustrated during the recent debate over the issue of shmitta, or the sabbatical year.

The Torah enjoins that every seventh year Jewish farmers in Israel let their land lie fallow as a sabbath. When the Zionists returned to Israel in the 20th century, however, observance of the sabbatical was not economically feasible. So the religious Zionists, led by Rabbi Abraham Kook, ruled that a Jewish farmer could ''sell'' his land for the year to an Arab, with a fictional contract, and his land would then not be Jewish-owned. That would allow him to eat of its harvest.

But this year when the Chief Rabbis, following on Rabbi Kook, advised Israelis to ''sell'' their land to the Arabs, the Haredim denounced this as a religious fraud. They insisted that the state instead sell the entire crop of Israeli-grown wheat abroad and import American-grown wheat in its place.

The Minister of Industry, Ariel Sharon of Likud, bowed to the increasing electoral power of the Haredim and agreed to try to work out a solution along the lines they stipulated, thereby enraging religious Zionists.

During the Cabinet debate on the subject, the Minister of Religion, Zevulun Hammer of the National Religious Party, was quoted as saying, ''The Haredim deserve support, but there is no justification for all the arrangements regarding shmitta to be carried out in opposition to the Chief Rabbis.''

Mr. Sharon reportedly said, ''I respect religion and the rabbis.''

This prompted Minister of Absorption Yaacov Tzur, a member of the Labor Party, to retort about the Haredim: ''I also respect them, but there are other questions. This is a group of people for whom our national anthem, the flag, Independence Day and serving in the Israel Army mean nothing. It is not a problem of shmitta, or wheat, but of blackmail.''

Bargaining for Control On Defining a Jew

In a few weeks Parliament is again scheduled to debate the issue of who is considered a Jew. The Haredi parties want Parliament to reactivate a pre-1948 law governing changes in religious status that would empower the rabbinate to determine the religious status of any convert to Judaism who immigrates to Israel.

Since the Haredi parties do not recognize American-style Reform or Conservative Judaism, anyone converted by a Reform or Conservative rabbi would not be considered Jewish or eligible for automatic Israeli citizenship.

In a deal struck in May between Shas and the Likud bloc, Likud, which is led by Prime Minister Yitzhak Shamir, agreed in principle to back such an amendment.

''If this bill passes, it will mean that a person who was converted by a Reform or Conservative rabbi, who may have been living as a good Jew all his life, will be considered a non-Jew the minute he fulfills the Zionist dream and comes to Israel,'' said Rabbi Richard Hirsch, representative of the Reform movement in Israel.

The Likud accepted such a bill as part of a deal in which Shas agreed not to throw its support behind efforts by Foreign Minister Shimon Peres, leader of the Labor Party, to call an international peace conference on the Middle East. Had Mr. Peres offered Shas the same deal on the Jewish identity issue that Likud did, Shas would have supported an international conference.

''The only interest Labor and Likud have in religion is which rabbi can deliver to them the most votes to stay in power,'' said David Hartman, the modern Orthodox Israeli philosopher.

''But once these ultra-Orthodox have finished off the religious Zionists, they are going to take on the non-religious Zionists - that is, Labor and Likud -and make this state an uninhabitable place,'' he added.

''Unless the modern Zionists wake up and assume responsibility for articulating a view of Judaism that can live with the modern world, they will be digging their own grave,'' Mr. Hartman said. ''They will be left with a Judaism that repudiates modernity and will, in the end, undermine the whole Zionist structure that has been built here.''

By Thomas L. Friedman

MERON BENVENISTI lives in a sprawling old Jerusalem stone house in a mixed neighborhood of Arabs and Jews.

A few years ago, one of his Arab neighbors planted a bomb in the front garden of a Jewish home a few doors down from his. It wasn't a big bomb, just a small plastic bag filled with a little dynamite and a crude detonator - maybe enough to blow apart a small person.

Soon after the bomb was discovered and defused, the police arrested Zuhair Qawasmeh, the eldest son of Mr. Benvenisti's next-door neighbor, who confessed to planting it. He was sentenced to l8 years in jail, but was released in a prisoner exchange between Israeli and Palestinian guerrillas after serving only four years. Shortly after gaining his freedom, Zuhair Qawasmeh got married and, like a good neighbor, invited Mr. Benvenisti, a Jew, to his wedding.

''So there I was at the wedding,'' recalled Mr. Benvenisti, a former deputy mayor of Jerusalem, ''and I am asking myself: Who is he? My enemy or my neighbor? He is my neighbor, but he is a man who could have killed my children. In America, you can have a neighbor who is also your enemy, but not in this sense. He is my mortal enemy. He is a soldier. He is fighting for his own people against my people, like in war - but he is my neighbor.''

Twenty years after the Six-Day War of June 1967 Palestinians are still asking themselves the same question: Are we enemies or are we neighbors?

Before 1948, the Arab-Israel conflict was a conflict between two communities, Jews and Arabs, living in one ''state'' - mandatory Palestine - under the overall authority of the British.

Between 1948 and 1967, however, when Jordan controlled the West Bank and Egypt ruled the Gaza Strip, the perception of the conflict changed. The Palestinian Arabs were subsumed either within Israel, as Israeli Arabs, or by the surrounding Arab states, and the conflict really became one between Arab states and a Jewish state.

The irony of the 1967 war was that it brought the conflict back to its roots. The Israeli occupation of the West Bank and Gaza Strip put the area of mandatory Palestine once again under one authority - this time Israeli. And once again Palestinian Arabs and Jews are fighting for control of Greater Israel/Palestine. The last 20 years have been nothing more than the seventh day of the Six-Day War.

But it is a peculiar conflict, and during the last few years it has tangibly sharpened. It is a war carried on not by marching armies, but in the prose of daily life. The soldiers are students, shopkeepers and housewives. Here, war and peace coexist side by side, street by street and house by house in a bizarre ''twilight war,'' as Mr. Benvenisti describes it. Here, there are no trenches, no frontlines, no barbed wire separating the two sides and no accepted distinctions between civilians and soldiers, enemies and neighbors.

''This is a war,'' said Mr. Benvenisti, ''between two people who share the same sewers.''

I HAVE NEVER BEEN SO afraid of a white purse.

I was walking to work one morning and as I approached my office I saw a white purse sitting in the middle of the sidewalk. I quickly crossed the street and made a wide detour around it, expecting it to explode at any moment. I wasn't in my office for more than a minute before the bomb squad was cordoning off the area and removing the ''dangerous object.''

In today's Palestinian-Israeli twilight war, white purses and other prosaic objects take on a sinister character whenever they are found out of context. When The New York Times has empty space on a page it will often run a little filler ad for the Fresh Air Fund. In The Jerusalem Post the filler ad reads: ''Suspicion Saves! Beware of suspicious objects.''

Such ads are necessitated by the fact that before 1967 there was a physical partition between Palestinians living in the West Bank and the Gaza Strip, and Israelis. On maps, this pre-1967 border was drawn in green ink and became known as ''the greenline.'' Both sides enjoyed the peace of mind that came from being able to shoot across a clearly defined frontline at an external enemy.

But after Israel occupied the West Bank and Gaza Strip in 1967 that artificial front, that greenline, between Palestinans and Israelis was erased. Theirs became a war-without-a-front. Tanks and artillery were useless in this war. Instead, exploding purses, kitchen knives, stones, rifles and pistols became the weapons of battle. During the last seven months alone, 18 Palestinians and Israelis have been killed in individual stabbings, bombings and shootings.

In order to stay alive in this war-without-a-front, people on both sides have had to erect their own mental trenches, separating the world in which they believe themselves to be relatively safe from the world in which they know they are very unsafe. Stop any Israeli or Palestinian on the street today and he will map out for you in great detail his or her own geography of fear.

''My nightmare is having a flat tire,'' said a West Bank Palestinan journalist, Daoud Kuttab. ''In my nightmare I am driving down the Tel Aviv-Haifa highway and my tire goes flat and the jack and the wrench don't work. What do I do? Who do I ask? What if the police ask me for my I.D.? Once I get back to Jerusalem and I go over the hump into the Arab side, I immediately give a sigh of relief.''

''When I was a young boy growing up in Jerusalem, every Independence Day I would go down to the streets and dance with my friends,'' said Dan Laor, an Israeli literature professor. ''I never gave it a second thought. I knew where the frontline was and I stayed well away from it. Recently, my son turned 10 and I thought I would take him down to the streets to dance on Independence Day. But now there is no front. The city is united and in a strange way I was really worried. When Jerusalem was split and you could point to where the border was, somehow you felt safer. Now you have to carry your own border with you.''

That border can come up at any moment. Mona, a young West Bank Palestinian lawyer, tells of being at an Israeli theater with some Jewish friends when it was suddenly evacuated because of a bomb scare. ''The first thing I thought was, 'My God, I might be the only Palestinian here.' My Jewish friends wanted to stay while the theater was searched, but I told them, 'I must go. I will be blamed.' I was scared. I was really scared.''

Although there is still a good deal of Arab and Jewish mixing in public areas, many Israelis have simply stopped traveling to Jerusalem's predominantly Arab Old City out of fear of being stabbed; if they do go, some go armed, or in groups that include at least one muscular young man.

The Gaza Strip has become so dangerous for Jews that Israel's Yediot Ahronot newspaper recently issued guidelines for travel there: ''Do not drive at night. Do not drive alone. Drive with your windows closed on crowded streets. Look sideways. Try not to arouse attention. On entering town take off your seatbelt, you may have to abandon your car quickly.''

Palestinians have their own unwritten guidelines for avoiding hassles while in Israel, which were summed up by Hamad, a 35-year-old laborer from Gaza: ''Whenever I am in Israel, I try to stay in the shade.'' Some of his friends adopt Hebrew names, or wear yarmulkas, when ''behind enemy lines.'' In Tel Aviv, every other Arab waiter is called ''Rafi,'' an Israeli name Arab workers favor to make themselves invisible.

The confusion of living in a war-without-a-front is compounded by the physical similarities between Arabs and Jews. People don't know who to be afraid of sometimes. To help tell people apart, Israel requires all West Bank and Gaza Palestinians, except those living in Jerusalem, to have specially colored license plates on their cars. Here people don't look into each other's eyes to find the enemy, they look at their license plates. But even that can get confusing.

''My wife has a cousin in Bethlehem who has an old pickup with Israeli Jerusalem license plates and a big comfortable minibus with West Bank plates,'' said Mr. Kuttab. ''Whenever we go for a picnic we always debate whether to crowd into the old car with Israeli plates and not worry about Israeli checkpoints, or to relax in the comfortable minivan with Arab plates and wait at the checkpoints. It depends on how much time we have.''

THE WEST BANK IS PROBABLY the only place in the world where the maximum sentence for throwing a stone at another person is 20 years in prison - just five years less than the average murder sentence in Israel.

Why? Because in the Palestinian-Israeli communal conflict throwing a stone is considered an act of war. Because in the West Bank there is no crime; there is only politics.

''This is not New York City,'' said Israel Harel, a leader of the West Bank Jewish settler movement. ''When a Palestinian boy throws a stone at my car it is not because he wants my money. It is because he wants my house.''

Indeed, another peculiar feature of the Palestinian-Israeli twilight war is that neither community really makes a distinction between civilians and soldiers.

Ofra Moses, a 35-year-old mother of three, lived in the West Bank settlement of Alfei Menashe, 30 minutes from Tel Aviv. Last April she was riding with her family to buy matzo for Passover when someone hiding in an orange grove - presumably a Palestinian - threw a firebomb through the window of her Ford Escort and burned her alive.

Mrs. Moses thought she was an innocent civilian, but many Palestinians considered her, by her very existence as a West Bank settler, an occupier, a perpetrator of violence - a soldier and therefore a legitimate target. The most moderate West Bank Palestinan lawyer I know said with great indignation: ''I heard that the mayor of the Arab village next to Alfei Menashe went to the settlement to express his peoples' sorrow at Mrs. Moses' death. She was a settler, the root of all evil, and they expect us to believe that people are sorry she was killed? I'm not sorry one bit.''

Two days after Mrs. Moses died, Mussa Hanafi, a 23-year-old Palestinian from Rafah, in the Gaza Strip, was shot and killed by Israeli troops during a Palestinian demonstration at the West Bank's Bir Zeit University. Mr. Hanafi may have thought he was at Berkeley in 1968, taking part in a campus protest, with a little harmless stone throwing. But that is not how the Israeli soldiers who were the targets of the stones viewed him.

Lt. Col. Yehuda Meir, a senior Israeli commander in the West Bank, has faced many such demonstrations. What do his men see when they look through their gunsights at Palestinian student demonstrators? ''They see soldiers - without uniforms or ammunition,'' said Colonel Meir. ''But if these students had ammunition they would use it. These Palestinian are not protesting for books or tuition. They are motivated to do what they do by a nationalist cause.''

The confusion between civilians and soldiers continues to the grave. Normally, civilians killed in a war receive a civilian burial. Here, civilians who die in any way remotely connected to the conflict are buried as ''martyrs,'' and each community uses these deaths to reaffirm the rightness of their cause and to justify revenge against the other. Palestinian and Israeli funerals are so similar: each people stands over its coffins, drawing out the old familiar slogans like pistols from a holster.

At Mrs. Moses' funeral, Minister of Transport Chaim Corfu delivered the eulogy. What did he say of this woman who was killed buying matzo?

''Just as the soldiers who fell yesterday [ in Lebanon ] were killed defending the security of the Galilee, so, you Ofra, fell in the defense of the security of Jerusalem,'' declared Mr. Corfu. ''You, Ofra, you are our soldier.''

As for Mr. Hanafi, the Palestinian shot by soldiers, his funeral was more problematic. Israelis understand the power of the memorial, so when Palestinians are killed the army usually impounds the ''martyr's'' body, conducts an autopsy and then compels the relatives to bury the corpse at midnight, with only immediate family present.

Last month, however, after Awad Taqtouq, a money-changer from Nablus, was killed by Israeli troops, 500 of his friends and family hid in the cemetery after dark, taking the Israeli soldiers by surprise when they showed up with the body at midnight.

Mr. Hanafi's friends went farther: They stole his body from the Ramallah hospital before Israeli troops could impound it. They kept the corpse packed in ice at someone's home, and then, using a car with Israeli license plates, they drove it back to Mr. Hanafi's parent's home undetected. His family quickly put out the word that Mussa was back and 5,000 people turned up to watch his body, draped in a Palestinian flag, lowered into its grave.

''It was kind of a political festival,'' said Mohammed Ishteyyeh, a 31-year-old Bir Zeit graduate who attended the funeral. ''People praised Hanafi as a 'bridge to liberation.' It was a real push for new sacrifice. You could feel the anger in the young boys there. I was watching them. They had lost the smile of childhood. . . . Everybody was ready to die.''

IN THE FACE OF THE DAILY TENSION, Palestinians and Israelis seem to be looking at their walls instead of out their windows for peace of mind. At the austere campus of the Islamic University of Gaza, most of the walls are decorated with peeling paint and a few framed arabesque Koranic verses. Except in the student cafeteria. There, on the north wall, is a huge photograph of what appears to be Waikiki Beach in Hawaii, replete with palm trees, white sand, a clear blue sky and a calm azure ocean.

''What is that doing there?'' I asked my hosts, during a recent visit.

''We wanted to make some kind of compensation for students,'' explained Atif Radwan, the dean of students. ''They are surrounded by miserable scenes all day long. It is important that when they eat they see something beautiful.''

A few weeks after my trip to Gaza I was visiting Prof. Yaron Ezrahi at the Hebrew University's Mount Scopus campus. From his office window he has a priceless view of Jerusalem. But on his wall he has a large Ansel Adams photograph of Yosemite National Park covered in snow.

''I guess it is a projection of a certain peacefulness,'' explained Professor Ezrahi with a shrug. ''When I need some peace I look at it. It is like a therapeutic window through which I can enter another world that is remote, tension-free and inaccessible.''

The twilight war does that to people. Not everyone can afford wall photos, though, so the most common escape is just to tune out the daily brutality of life. The Israeli sociologist Janet Aviad calls it the process of ''rhinocerosization.''

''Your skin just keeps getting thicker and thicker, year after year, until you just stop noticing things,'' said Ms. Aviad. ''Twenty years ago the shooting of a Palestinian student or the firebombing of a settler would set everyone here on fire. Now most people just accept it. Events happen. They are written on your memory but you don't let the feelings sink in. It is a terrible analogy, but I can't help thinking of what they said about the people who lived near Auschwitz. They just didn't smell the smoke anymore. We don't either.''

It is not only that events have made people numb. There is also a willful numbing. No one dares put himself in the other's shoes. Around the 20th anniversary of the Six-Day War, Jordan Television, the station most watched by Palestinians, aired a British-made documentary on the Arab-Israel conflict - except it edited out all references to the Jewish trauma of the Holocaust. For the same anniversary, Israel Television ran a documentary exposing some of the brutality of the Israeli military occupation of the West Bank. The program set off a weeklong howl of protest from Israeli viewers, who complained that the depressing show spoiled their Friday evening and never should have run in prime time.

''I notice that when I walk down the streets I don't even see Arabs,'' said the Israeli novelist David Grossman. ''I see through them and they see through us. We are both experts at it now. We don't want to feel or see anything because, if we start to feel we might have to come to some dangerous conclusions, which we very much want to avoid.''

ON SABBATH MORNINGS in Jerusalem there are often so few people driving cars that residents returning from synagogue, sometimes still draped in their prayer shawls, walk down the middle of the streets. Where have Jews ever felt so much at home?

And yet, there is an underlying tension. The disappearance of the greenline dividing Israel from the West Bank and Gaza not only raised among Israelis the question, where is safe, but also, where is home?

The 1967 war added new rooms to the Israeli house in the form of the West Bank and Gaza Strip. But these additions came with 1.3 million Palestinians - Palestinians whose own national identity was sharpened by their contact with the Israelis. When the Palestinians were living among the Egyptians in Gaza and among the Jordanians in the West Bank, their distinctive identity was often blurred. They could in many ways become Egyptians or Jordanians, and some of them did. But once they were living under Israel they had only one choice - to be Palestinians, and to reaffirm the Palestinian national claim to the land.

''What luck!'' said the Israeli philosopher David Hartman. ''We thought we had come home. We thought we had ended the exile and then we find ourselves constantly reminded that we can't take our shoes off.''

Twenty years after the 1967 war Israelis are still arguing about where they feel at home. One school, led by many peace activists, argues that home is the place where one's own people is in a majority, and where one can live a free and democratic Jewish life, without feeling that one is suppressing another people. Therefore, home is pre-1967 Israel - without the West Bank and Gaza.

For the last few months, a group of peace activists has been going out on weekends with cans of green paint, brushes and maps of pre-1967 Israel and actually painting the greenline on the streets of Israeli towns and across fields, to remind themselves and others just where is home. But it's not always easy to stay within the paint.

''I was driving home from Beersheba late one night and we took a shortcut through the West Bank,'' recalled Mr. Hartman. ''Suddenly we got to this Palestinian village; lights were on and the whole village was lined up along the road - mothers, children, babies. Israeli soldiers were searching the homes. I looked at those villagers with their heads bowed low and I said to myself, 'How can this be my road home? This is not a Jewish home. Jews never did this. I don't recognize these soldiers as my own people.' It was like I was at home in the Greater Israel and not at home in my own Jewish body.''

But another view, articulated mainly by Jewish settlers, holds that home is not necessarily where your people are in the majority, but where history or the Bible or your very soul tells you that you are home. Home is where your roots are, and the roots of the Jewish people are in the biblical heartland of Judea and Samaria -also known as the West Bank.

''For me, to live in Judea and Samaria is to return home in the deepest sense,'' said Mr. Harel, a resident of the settlement of Ofra. ''The attachment to the land is almost erotic.''

On a recent visit to the West Bank settlement of Elon Moreh, I asked residents there what they saw when they drove past the Arab town of Nablus and the surrounding Arab villages to get to their homes.

''I feel like I am driving through the pages of the Bible,'' answered Elchanan Oppenheim. ''When I see the Arab women harvesting their crops, I see Ruth the Moabite in the fields of grain. . . . I live in the Bible.''

The settlers, because they feel at home in the deepest biblical or nationalist sense, insist on being able to feel at home in the practical sense as well. Explained Dina Salit, 38, who has lived in the West Bank Jewish town of Ariel for the last four years:

''My kids go to a Government school. I have a Government mortgage. I pay taxes to the Government. To me, I am at home. Well, you don't get firebombed in your own home, and, if you do, the whole country should be up in arms, not telling me, 'What can you expect if you live there?' ''

A few days after Ofra Moses was killed outside her West Bank home, the state coroner sent her husband, Avraham, an official Government death certificate. On the line for place of death was written: ''Out of the country.'' Mr. Moses was outraged, and he personally took up the matter with Prime Minister Yitzhak Shamir. An order was quickly handed down stating that henceforth, Jews killed in the West Bank will be deemed to have died at home.

THE LATEST FAD AMONG Palestinian youths is to wear T-shirts under their clothes, where Israeli troops cannot see them, which read: ''I love Palestine.'' But these T-shirts cannot compensate for the fact that the last 20 years have also left Palestinians feeling more Palestinian but less at home.

This sense of alienation is particularly sharp among those Palestinians who lost their homes in 1948 and have been living as refugees in camps in Gaza and the West Bank. After the 1967 war, they were once again able to visit their old family homes -which were now in Israel. Nasser, a 25-year-old mechanic from Gaza's Beach refugee camp, works as a laborer in Tel Aviv. On his way to work he often passes what was, before 1948, his father's home in the village of Hamama, near Jaffa. Today the land is owned by Jews.

''I pass the town of my origin everyday,'' he explained. ''I see where my father lived and the land we owned, but I cannot pluck a single flower. Sometimes I see an apple on a tree there, and I want to pick it, but I am too scared.''

But sometimes it is just the little things that make them feel strangers in their own houses, say Palestinians - like dialing a number somewhere in Israel or the West Bank and getting a recording in Hebrew. Sometimes it is the road signs, with Hebrew and English letters sandwiching the smaller Arabic in between. Sometimes it is the insecurity of never knowing when your land might be confiscated, or when your son might be arrested in a security sweep after a bombing.

''I don't feel at home when I am at home,'' said Mr. Ishteyyeh, the Bir Zeit graduate from a West Bank village, who has been arrested three times for political agitation. ''Actually, my family's home is the most dangerous place for me, because that is the address where the Israelis will come to find me.

''When the Israelis came to arrest me in 1979, it was at night and the dogs in the village started barking. Ever since then I hate that sound. When I am at home and the dogs bark at night I spend hours sitting in front of the window, watching who is coming. I don't feel comfortable sleeping in my own bed. I always sleep better out of the country.''

Another major cause of alienation for Palestinians is the fact that the Israeli security apparatus in the West Bank and Gaza Strip is devoted primarily to protecting Israelis from Palestinians, but not Palestinians from criminals. In Ramallah, an exclusively Arab town north of Jerusalem, the local Israeli police station sign says ''Police'' in Hebrew and English, but not in Arabic.

''Israelis could not care less about security among Palestinians,'' said Eyad el-Sarraj, the only psychiatrist in Gaza. ''The local police force is either nonexistent or corrupt. One night I caught a burglar in my house. The first thing I did was call my cousins who live in the neighborhood. We tied the man up with a rope and beat him until he told us his name. Then one of my cousins went and got his parents and we settled things with them. And here I am, a doctor trained at the University of London. . . . It never occurred to anyone to call the Israelis.''

For most Palestinans, the only way to feel at home is to ignore the Israelis as much as possible. ''Once I come home and lock the front gate, I am the king of my house,'' said Isam Rushdi Shawwa, a Palestinian businessman from Gaza. ''When I leave my house, I just put on blinders - like a horse. I see only the people I like, which does not include my occupiers.''

SEVERAL WEEKS AGO Palestinian guerrillas launched a few Kaytusha rockets from southern Lebanon into northern Israel. Following the attack, Josef Shahaf, an Israeli, walked into the Qiryat Shemona police station and filed a criminal complaint against Yasir Arafat for attempted murder. ''I'm not interested in the Israeli-Arab conflict,'' Mr. Shahaf told the police. ''I am only interested in guarding my life and that of my family. Therefore we need once and for all to catch Arafat, who keeps trying to kill men, women and children in this area.''

The Israeli police accepted the complaint.

That incident was a classic illustration of the way Israelis and Palestinians try to avoid seeing the conflict for what it really is: two equally legitimate communities fighting a war over the same home. Neither side can live with that symmetry; neither side can admit a political claim to the land that is relative and not absolute. So each side portrays itself as the legitimate political movement and the resistance of the other as a criminal, racist or terrorist phenomenon. In a normal war you don't file a criminal complaint against your enemy, or bother having the United Nations brand him as racist, as the Palestinians did with Israel - but this is not a normal war.

The danger is that by the time both sides wake up and agree to recognize each other, it will be too late. At some point this conflict will stop being about its root causes and will just be about hatred. At some point it will no longer be a conflict on the way to a resolution, but a way of life - or, more appropriately, a way of death.

''I had a teen-age boy come into my clinic recently,'' said Dr. Sarraj, the Gaza psychiatrist. ''He said to me in a whisper: 'Doctor, I have a secret.' I thought, 'Okay, another paranoid - that is how they usually introduce themselves.' He then said, 'I just want to kill one Israeli. I have decided that the solution to the problem is that we must each kill just one Israeli.' He said that he heard that I had 'influence' and maybe I could get him a bomb. I explained to him that I had no such influence. Then I thought, 'I better examine this kid.' I was certain that he was psychotic. So I examined him for an hour. He was perfectly normal.''

A few weeks after that conversation an Israeli man was shot and killed while shopping in Gaza. Aterward, The Jerusalem Post interviewed a 17-year-old Israeli boy from the dead man's hometown and asked him how Israel should deal with Gaza. Answered Yehuda Ben-Tov: ''What they ought to do is bring in the Air Force to level it - all of it. Like that tornado in Texas.''

The more Israelis or Palestinians cling to their exclusive claims to this land, the more they must deny the righteousness of the other's claim. Only by contracting their demands to the point where the other is allowed his own space and his own national dignity will each side really be able to stretch out, relax, and truly be at home. As long as your neighbor is your enemy, your house will never be a home - it must be a fortress.

Until that happens, no matter what they call this land, Palestine or Greater Israel, neither Jews nor Arabs will ever really be able to take their shoes off.

By Thomas L. Friedman

JERUSALEM— FEW Israelis have ever heard of Saeb Erakat, a West Bank Palestinian who has never been considered dangerous enough to grab many headlines here. But his story speaks volumes about the state of Israeli-Palestinian relations and the uncertain prospects for eventual negotiations.

Mr. Erakat is a 32-year-old political science professor at the West Bank's al-Najah University in Nablus. He also used to be the university's spokesman. He is by his own definition a ''moderate'' Palestinian nationalist, who is ready to live alongside Israel, provided an independent Palestinian state is created in the West Bank and Gaza.

But moderates of Mr. Erakat's persuasion no longer seem to be of interest to the Israeli Government. Since Jordan broke with Yasir Arafat's Palestine Liberation Organization in February 1986, King Hussein has been working secretly with Israel to supplant even relatively moderate Palestinian nationalists with pro-Jordanian Palestinians who prefer that the West Bank be reintegrated with Jordan. Under this developing Jordanian-Israeli condominium over the West Bank, King Hussein and his supporters would dominate Arab life. Israel would control overall security and the Jewish population, while advocates of an independent West Bank Palestinian state would be reduced to marginal status. Israel hopes to gain a cooperative, quiescent local Arab administration, while King Hussein would increase his influence in hopes that if any of the land is one day relinquished by Israel the inhabitants would vote to return to Jordan - and not for an independent Palestinian entity. Three Disputed Words

Mr. Erakat became an apparent victim of this policy around midnight on June 4, 1986. Israeli troops broke into the al-Najah campus looking for P.L.O. literature and carted off most of the files in his public relations office. The military government later charged him with ''incitement'' because of three words he had written in the June 1986 Al-Najah University newsletter, which was found in his files. The newsletter is published in English. It is not distributed in the West Bank, but only to 3,000 university friends abroad. In an article, Mr. Erakat wrote that after 19 years under Israeli rule, Palestinians must learn to ''reject, endure and resist'' all forms of occupation.

During a military trial last spring, Mr. Erakat argued that he had been calling for patience and passive resistance, not armed struggle. He testified that he had brought students from Tel Aviv to meet students at al-Najah and could hardly be called an advocate of violence. Mr. Erakat, who earned a doctorate at Bradford University School of Peace Studies in England, was also one of the few in his community who dared sign a petition denouncing the stabbing by Palestinian militants of a 70-year-old Jewish man. For such stands, he was branded a ''Jew lover'' by Palestinians who totally reject Israel.

But on April 6 the military judge found Mr. Erakat guilty. The judge said that although the newsletter was written in English, someone could have translated it and sent it back to the West Bank to be read by young Palestinians. The military prosecutor argued that while Mr. Erakat was not a violent man, he was a respected opinion leader and should be made an object lesson. On July 16, he was given an eight-month suspended sentence and fined $6,250, Mr. Erakat's teaching salary for half a year.

''When I listened to that sentence I thought to myself, the Israeli occupation must really be in trouble,'' said Mr. Erakat. ''If they have reached the point of fining someone like me $6,250 for three words written in English and sent abroad, then the occupation is not working and they are really getting nervous. They have become politically blind.'' Indeed, the seeming inability or unwillingess of the military government to distinguish between a Saeb Erakat and a bombthrower raises serious questions about prospects for eventual peace negotiations. Israel has long professed to be interested in negotiating with legitimate, moderate Palestinian nationalists who are not P.L.O. members. But since the understanding with Jordan, Israel appears to be increasingly less able to tolerate, let alone nurture, such individuals.

''Today in the West Bank you must either be pro-Jordanian or shut your mouth,'' said Mahmoud Abu Zuluf, the Palestinian nationalist editor of the newspaper al-Quds in Jerusalem. Although no charges have been filed against him, the Israeli Interior Ministry recently forbade Mr. Abu Zuluf to leave Israel for one year.

Israel makes its own definitions of what constitutes a Palestinian ''moderate'' or ''extremist.'' And since the de facto alliance with Jordan, Israel seems to have lowered the threshold of extremism to include the likes of Mr. Erakat. In the last year, the Israelis used the stick of expelling without trial Akram Haniye, a Palestinian activist and editor of the newspaper As-Shaab. Jordan, meanwhile, used the carrot of rewarding its supporters in the West Bank and Gaza with jobs, passports and passes to cross the Jordan River bridges. Jordan, which still controls and pays the salaries of many schools, charities and municipalities in the West Bank, also purged dozens of Palestinian nationalists from these institutions.

''When I say I am a moderate,'' explained Mr. Erakat, ''I mean that a just peace can be achieved between Israelis and Palestinians that will include security, independence and dignity for both sides. Unfortunately, today when Israel thinks of a Palestinian 'moderate' it thinks of someone who sees only through its eyes, hears only through its ears and speaks only through its mouth.''

By Thomas L. Friedman

GAZA, Oct. 12— Forty-two-year-old Suad al-Hadidi is a symbol of what Yasir Arafat calls the Palestinian ''demographic bomb.''

Sitting up in her bed in the maternity ward of the Remal Health Center in Gaza, Mrs. Hadidi proudly folded back some thin white sheets to show off her 10th child, a handsome girl named Ayat, who was born the night before.

Ten children is nothing unusual for Palestinians in the occupied Gaza Strip, said Dr. Zuhni Yusef al-Zahidi, head of maternal health care at the clinic. He said he knows several mothers who have up to 15 pregnancies and one man whose three wives bore a total of 25 children. Pressure on the Israelis

''Many people here say, 'We must have more babies to compensate for our losses in Lebanon and to put pressure on the Jews to come to the negotiating table,' '' Dr. Zahidi said in Arabic, as Mrs. Hadidi and other women in the maternity ward nodded approval.

Because of families the size of Mrs. Hadidi's, in 12 years Israel and the occupied territories will be, in demographic terms, a binational state. In 1985, for the first time, the total number of Arab children under the age of 4 in Israel, the West Bank and Gaza Strip was greater than the total number of Jewish children under 4 - 370,000 Arabs to 365,000 Jews.

The problems that the rise in Arab population pose for Israeli Jews is rapidly becoming the central issue in the political debate here about the future of the occupied territories and the character of the nation in the 21st century.

''We are heading for a binational state, not a Jewish state - no question about it,'' said Prof. Arnon Sofer, a leading experts on the demographic question and dean of the Faculty of Social Sciences at Haifa University.

Unless Israel withdraws soon from the West Bank and Gaza Strip, he said, Israelis will eventually be faced with the ''calamity'' of an Arab majority.

In such a situation, Israeli Jews will either have to extend voting rights to the Arabs in the occupied territories and risk their taking over the state, or systematically deprive them of their rights and turn Israel into a South Africa-like nation.

But not everyone here believes the future is so bleak.

''Everything we have accomplished here was against the statistics, so why should things change now?'' asked Geula Cohen, leader of the rightist nationalist Tehiya party, which favors annexation of the entire biblical ''Land of Israel'' - that is, pre-1967 Israel, the West Bank, Gaza and all of their inhabitants.

''If we would have paid attention to demographic forecasts in 1948 we never would have declared a state,'' Mrs. Cohen said. ''Just because you get a headache, doesn't mean you should go out and chop off your head. I don't deny that there is a problem, but we can live with it.''

The most recent Central Bureau of Statistics figures, in 1985 recorded 3.52 million Jews living in Israel and the occupied territories, or 62.8 percent of the population. There were 749,000 Israeli Arabs, 813,000 West Bank Arabs and 526,000 Gaza Arabs for a total of 2.08 million Arabs, or 37.2 percent of the population.

That picture is rapidly changing. According to bureau figures, in 1985 Israeli Jews had an average birth rate of 21.6 per 1,000 people, while Israeli Arabs had a birth rate of 34.9, Arabs of the West Bank 41.0 and Arabs of the Gaza Strip 46.6 - more than double that of Israeli Jews.

Given these rates of growth, the bureau has prepared various low and high demographic forecasts for the 21st century. The low population forecasts assume decreasing rates of natural growth - that is, births over deaths - in each group and high rates of emigration. The high forecasts assume the opposite.

Professor Sofer has averaged all of the high and low forecasts and adjusted them for the year 2000. A bureau official verified his figures. The Numbers Are Clear: 4 Out of 10 Will Be Arab In the low average forecasts, in 12 years Israeli Jews will number 4.2 million, or 58 percent of the population, and Arabs in Israel, the West Bank and Gaza 3.1 million, or 42 percent.

In the high average forecasts, Israeli Jews will number 4.3 million, or 54 percent, and the Arabs 3.7 million, or 46 percent.

In either forecast, Arabs will soon be almost half the population.

The bureau, which has been doing long-range population forecasts since the early 1950's, has consistently been highly accurate.

When the changing settlement patterns of these growing Arab and Jewish populations is used as a factor, another picture emerges.

In the Golan Heights, the Jews are still a minority, 38 percent to 62 percent. In the Galilee region of northern Israel, Arabs make up 52 percent of the population and Jews 48 percent. The Negev holds what Professor Sofer called ''a kingdom of the Bedouin'' - a large Arab Bedouin majority, except in the major towns.

In the West Bank, Arabs outnumber Jews 813,000 to 60,000, and in the Gaza Strip, 526,000 to 2,000. There are clear Jewish majorities only in the large cities, like Tel Aviv, Haifa, Jerusalem, Tiberias, Hadera, Nahariya and Netanya, and their metropolitan areas.

But for how long? According to a study done by Haifa University, the number of Jews in Haifa increased by five-tenths of 1 percent between the censuses of 1972 and 1983, while the number of Arabs there increased by 40 percent during the same period.

This is largely because the young, better-educated generation of Hebrew-speaking Israeli Arabs are leaving their villages and moving to Jewish big city neighborhoods to find better jobs, although not without problems.

Last June, the apartments of six Arab workers, who had moved from their villages to the Jewish Tel Aviv suburbs of Ramat Amidar and Ganei Yehuda, were set afire by Jewish youths. The Israeli police described the attack as a pogrom.

''We don't want Arabs living in our neighborhood,'' a Ramat Amidar resident told The Jerusalem Post. ''Let them live in their areas in the Galilee and West Bank, where they belong, but not here. This is a Jewish neighborhood. We won't stop until the last Arab gets out.''

Professor Sofer sees a security issue. ''If the present Arab population creates such problems,'' he said, ''imagine what it is going to be like in 12 years when their numbers will have almost doubled. We will be busy with internal security all the day.''

More and more Israelis are concerned about the increase in the Arab population. One 24-year-old Israeli college student said she has encountered increasing talk among her Jewish friends about the need to have at least five children to keep up with the Arabs.

''I spoke to an old friend of mine from the army who just had his fourth son,'' she said. ''When I congratulated him, he said, 'Well, this is my contribution to the demographic war.' ''

Way to a Compromise: Stress Demographics

The issue is also beginning to have a profound effect on both Israeli and Palestinian politics.

For example, Foreign Minister Shimon Peres, of the Labor Party, has used a new strategy in recent public remarks about his Likud bloc rival, Prime Minister Yitzhak Shamir.

Labor officials say that because the status quo still seems tolerable for most Israelis, they believe that the only ways to induce Israelis to seriously consider a territorial compromise with the Arabs are either under the pressure of a war begun by the Arabs, or through the recognition by enough Israelis of the demographic dangers.

Since a war is neither desirable nor likely, Mr. Peres has begun to emphasize the demographics.

The Likud bloc has traditionally referred to itself as the ''national party.'' But Mr. Peres has been telling Israelis lately that ''the Likud is not the national party but rather the binational party.'' By insisting on holding onto the West Bank and Gaza Strip indefinitely, he argues, the Likud bloc, in effect, insists on turning Israel from a Jewish state into a binational state.

The right-of-center Likud bloc has countered by saying that the Labor Party and its allies are ''defeatists,'' who have lost faith in Israel's ability to attract large numbers of Jewish immigrants. The Immigration Dream And Call for Expulsions In a speech June 25, Prime Minister Shamir declared that ''from its inception, our nation was 'the smallest of all nations,' and it always faced demographic problems.''

''Yet never did out people resort to the solution of escapism,'' he added. ''That is no solution''

''If we can now reinvigorate the economy in order to provide appropriate employment,'' he said. ''we can aspire to a resurgence of immigration.''

Until recently only Rabbi Meir Kahane, an extremist, dared call publicly for the expulsion of Arabs from Israel and the occupied territories. Their continued presence in Israel, he argued, threatened the nation's Jewish character.

But in the last two years, the Deputy Minister of Defense, Michael Dekel of the Likud bloc, and Rehavam Zeevi, a retired Major General who commanded Israel's central front, the most important in the country, have suggested a transfer of some or all of the Arabs in the occupied territories to neighboring Arab states. This, they say, may be the only way of avoiding what Mr. Dekel called ''having this area turn into a powder keg.''

Among West Bank Palestinians there is a growing school of thought, though still a minority, that believes the ''demographic struggle'' - not the ''armed struggle'' - is the best strategy for pressing Israel to grant the Palestinians a state in the occupied territories.

A leading proponent of ''demographic struggle'' is Hana Siniora, a Palestinian newspaper editor from Arab East Jerusalem, who announced last June that he was considering running for the Jerusalem City Council next year.

No Palestinian from the annexed half of Jerusalem has ever run in an Israeli election out of a concern that it somehow connote acceptance, or recognition, of the occupation of Jerusalem and the West Bank.

Mr. Siniora said, however, that since the Arabs of Jerusalem pay full taxes to Israel, they might as well be represented on the city council. Many Palestinians are quietly urging him to run.

''Just making more babies is not enough,'' said a Palestinian intellectual, Sari Nusseibeh. ''No one in Israel will be concerned by that alone. We have to put Israel on the spot. The demographic bomb will never explode without a fuse. The fuse will be our demand for equal rights.''

But even if the Palestinians in the occupied territories did one day demand equal rights, it is doubtful that Israel would accommodate them, since this would be political suicide.

More likely, said an Israeli Middle East expert, Meron Benvenisti, the Israelis will adopt the solution that the ruling Maronite Christians did in Lebanon after it was clear they were becoming a minority in their own country.

They simply stopped taking a census.

By Thomas L. Friedman

AMMAN, Jordan, Nov. 11— Yasir Arafat adjusted his glasses, brought the English translation of the Arab summit resolutions right up to his face and then squinted to make sure that his eyes were not deceiving him.

''This is a scandal,'' he declared, his voice quivering with rage and his hand slamming down on the table. ''You have a big story.'' What the chairman of the Palestine Liberation Organization had just discovered was that the English translation of the Arab League summit resolutions, which were distributed by the Jordanians, failed to include a reference to the P.L.O. as ''the sole legitimate representative of the Palestinian people.''

The Arabic version of the summit resolutions included the phrase, but for the several hundred American, European and Asian journalists attending the Amman conference it was the English text upon which they would base their reports.

Sensitivity of Arafat

By coincidence, an American reporter was in Mr. Arafat's suite at the Amman Plaza Hotel at the moment he discovered the missing phrase in the English text. The scene provided a rare glimpse of the suspicions that are often at the heart of inter-Arab politics, and particularly Jordanian-P.L.O. relations. It also gave an insight into the sensitivity of Mr. Arafat to even the slightest hint that his Arab ''brothers'' might be trying to undermine his legitimacy.

The incident began as the Jordanian television was carrying a news conference by King Hussein, and just at that moment the King was explaining in English that reports about a reconciliation between him and Mr. Arafat were ''premature.''

The two men have long been at odds over who should represent the Palestinians in any peace talks.

Talking About Arafat

Having come into the room in the middle of King Hussein's remarks about him, Mr. Arafat asked in Arabic: ''Who is he talking about?''

''You,'' his aides replied. Mr. Arafat listened.

While declaring that the P.L.O. was the sole legitimate representative of the Palestinian people, King Hussein added that ''hopefully'' the P.L.O. would be invited to any international Middle East peace conference. The King also casually added that it was not necessarily certain that the P.L.O. would have an independent place at any peace conference, but rather, King Hussein said, the Palestinians might be represented as part of a joint Jordanian-Palestinian delegation - even though the summit resolutions spoke clearly of the P.L.O. taking part on ''equal footing'' with all other conference delegates.

Having heard enough, Mr. Arafat suddenly rose and walked into another room.

Not to Worry, He Says

What did he think about King Hussein's ambiguous remarks? he was asked by a reporter.

There was nothing to worry about, said Mr. Arafat, and just to emphasize that point he took the reporter's English text of the Arab summit resolutions and began reading aloud from the section detailing what the role of the P.L.O. should be at any international conference.

Pointing to the English, he said: ''Here it says, 'under the sponsorship of the United Nations and with the participation of all parties concerned, including the Palestine Liberation Organization . . . including the Palestine Liberation Organization . . .' No, there is something missing.''

With his finger, Mr. Arafat began to tap on the text, while in his other hand he twisted a strand of blue Arab worry beads.

''This is the old one,'' Mr. Arafat said nervously of the English text. ''Give me the Arabic version.'' He went on: ''This is bluffing. This is bluffing. They gave you the old one.''

From the Jordanians

Then waving the English text in his hand, he asked, ''Where did you get this?''

''We got it from the Jordanians,'' said the reporter.

''Yes, the Jordanians,'' said Mr. Arafat in a voice ringing with suspicion. ''You cannot take from them. You have to take from the Arab League.''

At that point Mr. Arafat lifted a black pen from his breast pocket, took the reporter's English text and wrote in his own longhand the missing words ''the sole legitimate representative of the Palestinian people,'' after the reference to the P.L.O.

A minute later an aide appeared with the Arabic version.

''You see, here it is,'' he exclaimed, pointing to the key phrase which was included in the Arabic version. He then turned his attention back to the English, his anger growing palpably. 'Translation Is False'

''This is not the Arab League translation, you have a scoop,'' he fumed. ''The translation is false. We only accept the Arabic text in the Arab League.''

Did he think this omission was deliberate?

''Yes, this is not a joke,'' said Mr. Arafat, once again tapping his finger on the text. ''This is not a joke.''

Then, trying to avoid an open spat with his host, King Hussein, Mr. Arafat added: ''There are some small people here trying to do something. His Majesty King Hussein was clear, while these small employees . . .''

It was impossible to find any Jordanian officials who could explain the omission in the English text, which may well have been only an accident, but no one will ever be able to convince Mr. Arafat of that.

''They are trying to cover up internationally what they failed to do in the conference,'' said the P.L.O. chairman, who stalked off muttering to his guards, ''Yes, yes, it is a scandal.''