Death of Israeli girl catches Yitzhak Shamir in election-year squeeze. WEST BANK CLASH

The death of a Jewish girl in last Wednesday's clash between Jewish settlers and Arab villagers has unleashed a political donnybrook in Israel with potentially major election-year implications. On one side are Jewish settlers and right-wing politicians, who have angrily condemned government security policies in the occupied territories for contributing to the girl's death.

On the other side is the Army's chief of staff, Brig. Gen. Dan Shomron, now under fire from the right for releasing a report which raises questions about key elements of the settlers' version of the episode.

In the middle is Israeli Prime Minister Yitzhak Shamir who now has to decide what measures to take to placate his outraged constituents on the right who, led by Knesset member Guela Cohen, yesterday demanded General Shomron's resignation.

``This is a turning point in the way the prime minister will have to think about how to deal with what's going on in the territories,'' Ms. Cohen predicted in an interview yesterday. The incident presages ``a great victory for the nationalist camp'' in national elections scheduled for later this year.

Cohen and other conservative Israeli lawmakers are pressing Shamir to expel the inciters, end an unofficial freeze on the construction of new Jewish settlements on the West Bank, and relax restrictions on the use of live ammunition by the Army in quelling Palestinian unrest.

``The government has to change its security policy which until now has been kid's play,'' warns Benny Katzover, head of the Samaria regional council, an umbrella group of Jewish settlements in the West Bank.

Exact details of Wednesday's clash, involving a group of Jewish teen-agers on a nature hike from the settlement of Elon Moreh and Arabs from the West Bank village of Beita, have been almost impossible to reconstruct because of conflicting accounts.

After first reporting that the Israeli girl had been stoned and beaten to death by Palestinians, the Army reversed its position, saying she was killed by a bullet. It is still not clear who actually fired the shot, the Army says.

Five of the hikers told a press conference in Jerusalem yesterday that the group was stoned by a dozen Arab youths as it passed near Beita.

After Romam Aldubi, one of two armed guards that accompanied the group, killed an Arab who tried to seize his rifle, the group was forced to proceed to the village. There, the account of the youths continues, they were set upon by hundreds of villagers leaving 14 wounded and Tirza Porat dead, the first Israeli civilian fatality of the four-month Palestinian uprising.

At that point, according to the hikers, several of the Arab villagers appealed for calm, helped the wounded, and called for ambulances.

Shomron angered settlers when he told an Israel radio interviewer Saturday that he did not believe most of the Arab villagers intended to hurt the settlers. The settlers were also dismayed by the leaked report and by reported criticism of the settlers for not obtaining Army authorization for a hike through an area now considered dangerous because of the uprising.

A military report leaked to the press over the weekend also disputes the allegation of several of the Jewish younsters who reported seeing Arabs firing Soviet-made Kalisnakov rifles during the melee in the village. According to the Army there was no evidence of any guns other than the M-16 and an ``Uzi'' submachine gun carried by the two guards. Both weapons were captured by the Arabs but it is not clear if they were ever used. The bullet that killed Porat was fired from an M-16, according to the Army.

Aldubi, the only person capable of clarifying the key details of the incident, lies critically wounded and unconscious in a hospital near Jerusalem.

The Army interrogated hundreds of Arabs and detained 30 following the incident. Over the weekend 14 Arab houses were demolished.

An Army spokesman yesterday defended the demolition of the houses saying they belonged to persons ``physically involved in or trying to organize'' last week's incident.

According to one Beita resident, the first house demolished by the Army belonged to Azzam Hafiz Mutkal Ahmed, one of the Arabs who first tried to restore calm and who helped the wounded teen-agers. The Army spokesman declined to confirm or deny the report.

Asked whether, given the Army's own revised account of the incident, the military may have overreacted in destroying the homes, the spokesman defended the decision.

``It was an attack on the children,'' she said. ``It doesn't matter how she died.''

As Shomron and Defense Minister Yitzhak Rabin reported to the Cabinet on the incident yesterday right-wing demonstrators protested outside the prime minister's office.