Europe trades political favors for Mideast oil but tilt toward Arabs has little effect in Middle East

Western Europe's controversial tilt toward the Arab world, including Austria's "new form of diplomatic recognition" for the Palestine Liberation Organization (PLO), is so far making more headlines than difference in the Middle East arena.

The key to Arab negotiating aspirations, even top Arab diplomats acknowledge privately, remains in Washington -- more than in Vienna, Paris, or London. And on the Arab-American front, fresh signs of discord and misunderstanding emerged in recent interviews with officials from each camp.

The Carter administration, a senior US official said by telephone, still views the lumbering Egyptian-Israeli talks on Palestinian autonomy as a cornerstone of its Middle East Policy. Arab officials, for their part, are hoping the talks will finally collapse as their May 26 "target date" approaches -- and that Washington will follow Europe's pro-Arab lead as an alternative to utter stalemate.

Europe can boost Arab credibility -- and concurrently, as even Arab officials note a little wryly, boost European oil stocks. But the Europeans cannot really pressure Israel to go along with the Arab negotiating demands. The only state that can, however imperfectly, is the United States. A major reason is that Washington funnels billions of dollars in economic and military backing to the financially strapped Jewish state.

Some Arab diplomats argue that the Europeans could all but force the Carter administration into a Middle East shift by ganging up with Arab oil powers against current US policy.

But so far, European diplomats seem to be taking a more gentle tack. One indication: Arab officials say they are being urged by some West European quarters to forgo a bid for a pro-Palestinian Security Council resolution until the May target for an autonomy accord arrives.

How, when, or whether Carter administration policy may change seems to depend on a number of factors, pressures, and constituencies: the Europeans, President Carter's presidential campaign opponents, Egypt, Israel, the Arab oil world, and even Afghanistan.

According to both Arab and Western diplomats, among the relevant questions for President Carter are the following:

* Would a perceived "anti-Israeli" policy shift be feasible in a presidential election year, especially given Massachusetts Sen. Edward Kennedy's vocally pro-Israeli stance?

* Does the American public buy the argument that agreement on the Palestinian issue, surely implying concessions by Israel, is tied to aligning moderate Arab states against the Soviet Union and to assuring US oil supplies?

* Will the PLO go along with its part of the unspoken bargain for a pro-Arab shift in Washington: that is, at least tacit recognition of Israel's right to exist?

* And even if Washington did embark on a campaign to pressure Israel by tilting toward the Arabs, would such pressure work?

The administration's inclination, both US and dismayed Arab diplomats suggest , is to answer "no" to most if not all, of these questions.

The equation could change if energetic American efforts to win an autonomy agreement, however tenous, fails. But for the time being, Washington is putting its eggs in the autonomy basket.

Arab-American relations are, unsurprisingly, souring.

The latest cloud in that area -- two weeks after Washington's flip-flop on a UN condemnation of Israeli settlements -- came with President Carter's new conference statement March 14 that Washington favors an "undivided" Jerusalem.

One Jordanian official bitterly brands the earlier US turnabout in the UN "a fiasco," implying that a spineless Carter administration had simply knuckled under to Israeli pressure.

A senior Arab diplomat suggests Mr. Carter's Jerusalem statement is a further move in that direction -- implicitly edging toward acceptance of Israel's annexation of the eastern, formerly Jordanian, half of the holy city after the 1967 Middle East war.

"Ah, come on," remarked a senior US official privately. "The Jerusalem issue is complex. President Carter's statement does not alter other aspects of our Jerusalem policy, including the view that the sector of the city that fell under Israel control in 1967 is seen as 'occupied' territory."

But US and Arab diplomats seem, increasingly, to be speaking in different tongues. And despite Middle East newspaper fanfare over the West European "diplomatic initiatives," more than a few Arab officials question whether Washington, at least for the time being, plans to follow suit.