Saudi prestige on the line

Saudi Arabia's considerable prestige is on the line at the 12th all-Arab summit taking place this week among the bougainvillea and palm gardens of Morocco's ancient city of Fez.

The Saudis are negotiating intensely behind the scenes to win support for their Mideast peace plan, the central issue at the summit, so that it can be placed on the agenda for consideration. If the plan is accepted, and eventually adopted, it appears likely to carry some amendments to appease the more radical Arab heads of state.

The key provision of the plan calls for Israel to withdraw from land it captured in 1967 and implies that Israel's existence will be recognized in return by the Arab states.

It would be a historic first if the often-quarrelsome Arab League members agree on a joint Mideast strategy - and a stunning success for the Saudis, who are riding the crest of a year's worth of diplomatic achievement. So far the Saudis:

* Diffused Syrian-Jordanian border tension exactly one year ago.

* Cooled the infighting in Lebanon.

* Helped negotiate an indirect cease-fire between Israel and the PLO.

* Lined up the Organization of Petroleum Exporting Countries (OPEC) behind Saudi price policy.

* Indirectly won a tough US congressional fight recently over the sale of AWACS surveillance planes and other military equipment to the desert kingdom.

''I tell you,'' says a veteran Arab commentator, ''if the Saudis win the (Crown Prince) Fahd plan, there will be no doubt Saudi Arabia is the leader'' of the Arab world.

But Arab diplomacy can be as confounding as the streets of Fez's celebrated medina, by far the most intricate and colorful in the Arab world. Though the Saudis are in a strong position going into the Nov. 25 opening of the Arab summit, a meeting among foreign ministers, now in progress, is revealing equally strong Arab opposition:

1. Iraq is known to be upset that the Saudis are bidding for the leadership of the Arab world. Since Egypt was ostracized for its peace treaty with Israel, Iraq itself has aspired to this role. But the war with Iran has tied down Iraq's resources and political flexibility. Informed observers say Iraq could cause problems for the Saudi peace plan.

2. Libya has rejected the Saudi plan up front, but it is possible that behind-the-scenes Saudi diplomacy may control the damage that the expected Libyan boycott of the summit might otherwise cause. Observers say Libya is isolated even among Arab radicals and therefore may not have much following in its attempt to undermine Saudi Arabia's position.

3. The PLO, the object of Arab peacemaking at this point, is reported to be under tremendous pressure from within its own ranks and from a range of conservative to radical Arab patrons not to be too ready to recognize Israel. The PLO, with the full status an Arab nation at the summit, has been maintaining an equivocal position so far.

If the Saudi plan, even in an amended form, is adopted, American and Israeli officials say it is unlikely that Israel will enter into negotiations on the basis of that plan. This rather pessimistic assessment derives primarily from the US State Department and congressional foreign policy analysts interviewed by this reporter in Washington last week.

The eight-point plan, which Crown Prince Fahd first proposed in August, has generated yards of diplomatic and journalistic cables. But there has been only slight give in the fiercely held positions of the main protagonists: Israel and the PLO.

Israel's Menachem Begin has flatly rejected the Saudi plan, but other influential Israeli officials have hinted it is worth talking about. The PLO has been lobbied intensely by Saudi Arabia, and the upshot is that the PLO would endorse the plan if Israel and the US accept every point of it up front - a highly unlikely event.

This has created a difficult impasse since neither side appears willing to be the first to make a concession.

''The Israelis can handle any border, internal, or diplomatic problem with their Arab neighbors'' says a US State Department official. ''Israel is in the driver's seat. This is the reason the Fahd plan is a nonstarter: The Israelis have changed the facts on the ground. Israel will never pull out (of the occupied territories) or give up East Jerusalem, or the Golan Heights.''

Similarly, say US and Arab diplomats, the PLO is still quite far from recognizing Israel's existence - and still sees Palestine as an issue worth fighting for. Thus the best the Saudis can hope for at this summit conference is winning the leadership role with its relatively moderate Mideast policy. But if any of the spoilers have their way, even that may elude the Saudis.