US undecided, Arabs divided, as Israel holds initiative; Israeli raids upset White House schedule for drafting comprehensive policy to replace stopgap approach

In the face of a divided Arab world and an indecisive Reagan administration, Israel still holds the initiative in the Middle East. Israel's air attack on Beirut has deeply upset America's European allies, many members of the US Congress, and apparently some top officials within the Reagan administration. There is a widespread feeling in Washington that something must be done to contain Israeli Prime Minister Menachem Begin.

But beyond delaying warplane deliveries to Israel and working toward a cease-fire in Lebanon, the Reagan administration seems to have little notion of how to proceed. Its initial reaction to Israel's July 17 air strike into Beirut was viewed as relatively mild.

The administration had hoped to develop a more comprehensive Middle East policy as a result of planned visits to Washington by Egypt's President. Sadat (next month) and Prime Minister Begin (in September). But Mr. Begin has not been willing to wait. He has been delivering on his election campaign promises to carry out a tough policy toward the Palestine Liberation Organization (PLO).

Some observers think Begin next will move to further tighten Israeli control over the Israeli-occupied West Bank of the Jordan River and over East Jerusalem. In both those areas, the Reagan administration has yet to make clear what its policy is.

"What would be most helpful would be for the administration to clear up the mishmash of statements which they have made over the past few months," said a high-ranking United Nations official now engaged in efforts to achieve a cease-fire in Lebanon.

"They have yet to make clear that they have a Middle East policy," he said. "One day, they are criticizing the Israeli raid on the Iraqi reactor. The next day, Reagan says he could understand why the Israelis felt a need to do what they did. . . . Nobody knows what the administration's policy is on the [West Bank] settlements or on East Jerusalem."

Instead of articulating policy on such tough issues, however, the administration gives the appearance of making tactical adjustments, such as the announced delay in delivery of F-16 warplanes to Israel. In other words, the administration is trying to calm things down and buy time while deferring the hard decisions.

Judith Kipper, resident fellow and Middle East specialist at the American Enterprise Institute, a conservative Washington, D.C., "think tank," believes that in the meantime Prime Minister Begin is likely to continue to hold the Middle East initiative -- right up to the time of President Sadat's visit to Washington, Aug. 5-6.

Ms. Kipper correctly predicted on Israel's election day (June 30) that a reelected Begin would ignore differences with the United States while combating the PLO more vigorously and making moves on the West Bank. She also predicted major Israeli military operations into southern Lebanon. She now thinks that among the moves Begin might be considering are establishing his office in East Jerusalem and even moving to annex the West Bank and Golan Heights.

Writing in the Washington Star on July 19, Donald Neff, a former Time magazine correspondent and author of a forthcoming book on the Middle East, says that the Israeli government is spending an estimated $500 million to $600 million on West Bank settlements -- equal to nearly a fourth of America's annual aid package for Israel.

"Only one policy would justify this enormous expenditure," says Mr. Neff, "and that is de facto annexation of the West Bank."

Some observers, such as Neff, think that such an annexation would end all hope of resolving the Israeli-Palestinian conflict short of more war. But unlike previous presidents, Mr. Reagan has indicated that he does not consider the West Bank settlements to be illegal. And the President's every instinct seems to run against putting pressure on the Israelis. He and a number of his advisers have long agreed with the Israeli proposition that Israel is America's most valuable anti- Soviet asset in the Middle East.

Other sources of pressure aimed at restraining Israel would be Western Europe , the US Congress, and Israel's sole Arab peace partner, Egypt.

But in the absence of American leadership, the Europeans seem powerless to do much.

In the Congress, one staff specialist on the Middle East says "People are pretty fed up with Menachem Begin. . . . But I don't think there is any mood in the White House or the Congress to cut off all aid or really rein Begin in. People just wish Begin would behave himself and the problem would go away."

As for Egypt, the best guess is that President Sadat will do nothing to endanger his already strained relationship with Begin before the rest of the Sinai is returned to Egypt in 1982. As an Egyptian diplomat put it, "Even if the whole world goes berserk, before April 1982, we're not going to rock the boat . . . and Begin knows it."