Israelis debate how to counter 'the rabbi who hates Arabs'

''Kahane is great,'' crows a taxi driver straining for a view of his hero's ''victory march'' through Jerusalem's main vegetable market. ''He doesn't like Arabs, and neither do I!''

''He's a fascist! A Hitler!'' mumbles a shopper under his breath as the procession passes.

Then, louder, after he's sure the American-born rabbi's several dozen young co-marchers are out of earshot: ''You journalists are terrible. You're helping make him a hero.''

Having just won a seat in Israel's 120-member Knesset - or parliament - on his third try, Rabbi Meir Kahane has indeed set off on a media campaign to parlay that victory into the start of a grass-roots bid to intimidate and ultimately to expel the country's large Arab minority.

And the early result of Kahane's election - to his own evident satisfaction - has been a sharp national debate awarding him more attention than any of the other 14 parties occupying the new parliament's remaining 119 places.

''We are the wave of the future,'' proclaims Kahane, who founded the Jewish Defense League in 1968 and emigrated to Israel three years later, where he set up the virulently anti-Arab party, Kach.

''There are a lot of closet Kach people,'' he told reporters a few days ago. ''A lot of people walk into their closets every morning, straighten their ties, say, 'Kahane is right,' and then walk out again.''

This is hard to gauge. But suddenly high on Israel's political agenda is the question of how, if at all, the political mainstream should respond to Kahane's winning of some 20,000 of the nation's 2 million votes. Should he be ignored, addressed as an ''errant'' individual rather than as part of a ''trend''?

''All societies have their lunatic fringe,'' remarks a left-leaning Israeli political science professor. ''Ours is a racist rabbi who hates Arabs.''

Should he be treated as the necessary price to pay for parliamentary democracy? Or should he be seen, in the ever-more-widely echoed words of one fellow American-born rabbi, as a potential ''threat to the political and social fabric'' of Israel that must be met even if the rules of democracy need to be stretched?

Many of Israel's politicians and editorialists fear Kahane will at least exacerbate the social divisions that helped produce last week's near deadlock between the mainstream right- and left-wing parties, and may encourage intolerance, extremism, and violence.

''Supporting Kahane is a way of voicing anger,'' says a politically centrist young Jerusalemite. ''And with the economy going to bits, and the failure of the major parties to appear decisive about anything, there are a lot of angry people out there.''

A prominent Israeli pollster says Kahane's election seems, above all, to have tapped gut anti-Arab sentiment among the country's Sephardic Jews - those who emigrated here from North African or Arab states. In lower-middle class, largely Sephardic development towns, the pollster says Kahane won up to a third of the vote.

''The Sephardim know what an Arab is,'' says Kahane, confidently adding they would have voted for him in even larger numbers had they not feared he would fail to pass the roughly 20,000-vote ''threshold'' needed to claim a Knesset seat.

In the next election, Kahane says, Kach will likely win a half-dozen additional places.

Yet central to the short-term concern here over Kahane's electoral victory is the fact that the country's law of ''parliamentary immunity'' could act as an umbrella for the kind of firey public addresses that have earned the rabbi some 20 separate arrests for incitement and similar offenses since he moved here from Brooklyn.

From various sides of the political spectrum have come calls to isolate Kahane, ostracize him, muzzle him on the Knesset floor by rushing through legislation banning ''racism'' - or to revoke his Knesset immunity, a move requiring a parliamentary majority and which, at present, looks unlikely.

The Haaretz newspaper lamented Sunday the fact that Israel's supreme court had rejected a move to ban Kach from running at all. Haaretz suggested that even though such a ban would have been illegal, the greater good would have been served.

Though the political left and center have spearheaded the post-election attacks on Kach, distinctly un-leftist figures like Prime Minister Yitzhak Shamir, former Defense Minister Ariel Sharon, and former Prime Minister Menachem Begin have all publicly distanced themselves from Kahane in recent days.

Colleagues in Shamir's Likud bloc, expressing concern that a frontal move against Kahane might simply award him greater status as a political martyr, stress the need for an ''education'' campaign aimed at convincing Israelis of the potential danger in Kahane's ideology.

Says a prominent Likud member, ''Kahane is ideologically wrong. It is wrong to posit that a Jewish state depends on expelling Arabs. A Jewish state depends on the strength of personal conviction among its Jewish residents.''

Kahane, himself, shows every sign of revelling in the attention. Typically garbed in a suit jacket, slacks, and loafers that make him look a bit like an aging preppy, the Kach leader has made a series of public appearances since election day, vowing: ''We'll drive this country crazy. We'll make this country Jewish again.''

Some 650,000 Arabs are Israeli citizens, and 1.3 million others live on the Israeli-occupied West Bank of the Jordan and the Gaza Strip.

Kahane has threatened to force his way into the President's home if he is not included in consultations on the make-up of a new government. He also says that when parliament reconvenes, he will propose a bill outlawing Jewish-Arab intermarriage. And the day after he takes his seat, he plans to go to the Arab town of Umm el Fahm in the Galilee to open an ''emigration'' bureau.

Calling the town ''a nest of vipers,'' Kahane proclaims: ''I'm going to say, 'Kahane is here, and you'll be leaving soon.' ''

''I don't want to kill Arabs. I just want them out!'' he says.

Yet one of his conditions for offering parliamentary support to Shamir's mainstream right-wing Likud is the release of more than two dozen Jews facing trial for terrorist plots or attacks against Arab civilians.

''I don't justify acts of violence against Arabs or anyone else,'' he told a small group of American reporters recently. Then, he added that the Jewish terror suspects alleged activity ''was just, on its own merits.''

In the victory stroll through Jerusalem's Mahane Yehuda market, one bystander approached and said: ''I have a few Arabs where I work,'' using a derogatory Hebrew epithet roughly equivalent to ''nigger'' in the US.

Kahane soothingly replied: ''I'll handle them all.''