A Step Toward Dialogue

THE Israeli Knesset took an important step forward last week by lifting its ban on contacts with the Palestine Liberation Organization.

Behind the ban lay the PLO's long-held goal of establishing a single state in the area now occupied by Israel, the West Bank, and Gaza. That, together with the terrorist tactics of some PLO factions, made it an intractable enemy in the eyes of many Israelis.

The PLO, however, has shifted its stance over the years, as exemplified by Yasser Arafat's 1988 speech calling for direct peace talks with Israel. It has been a major player in current talks, even though Israel insisted on no direct role for Mr. Arafat and company. In practice, the Palestinian delegation - comprised of residents of the West Bank and Gaza - have regularly conferred with the PLO leadership in Tunis.

So the legislative move brought Israeli law into conformity with diplomatic reality. The possibility of dialogue between Israelis and Palestinians is thus expanded. But the most important dialogue, between top leaders, is not yet in sight.

Israeli Prime Minister Yitzhak Rabin made it clear by his absence that he had little enthusiasm for the Knesset action. Mr. Rabin has shown no interest in talking with local Palestinian leaders such as Faisal al-Husseini, much less Arafat himself. Another blockage is Israel's expulsion of more than 400 Palestinians to southern Lebanon. The United Nations is increasing pressure on Israel to bring the deportees back. As a compromise, Israel could reduce the length of exile and let at least a portion of the

men return, with others to follow. But, as yet, the sides remain dug in.

Still, the lifting of Israel's ban on contact with the PLO strikes a hopeful note. It implicitly recognizes that the PLO remains, for now, the prime political voice for Palestinians - and a much better peace partner than the fundamentalist groups that are vying for Palestinian loyalty.