The impact of occupation - on both sides

She was a young, well-educated Palestinian from a good family on the Israeli-occupied West Bank. She taught at a teachers' seminary near Jerusalem. She had never engaged in illegal political action against Israel.

But, like many other of the best and brightest sons and daughters of the West Bank and Gaza, she emigrated abroad, perhaps never to return.

''I feel guilty at leaving in bad times, but it is impossible to live here under occupation,'' Leila H. (not her real name) explained on a visit home from New York City. ''You feel totally insecure. You have no power against the Israeli authorities. You never know what will happen to you from day to day.''

Approximately 17,000 Palestinians emigrate annually from the West Bank and Gaza out of a combined population of about 1.3 million. Many are drawn by job possibilities in the oil-rich Arab world or the West. Some come back.

But the daily pressures of Israeli occupation felt by every West Banker, even those not active in politics, help expedite the outflow. If no negotiated Israeli-Arab solution is found to end the occupation, then this exodus as well as other unfortunate trends will continue. And the West Bank and Gaza will be deprived of sorely needed development and potential leaders.

In the past the daily pressures of occupation on the ordinary West Banker were eased by the hope that the Israelis would ultimately leave. But with no end to occupation in sight, insecurity increases and the burden is felt more acutely , and in many ways. For example:

* While traveling. Each year hundreds of thousands of West Bankers cross over the Jordan River bridges under an Israeli policy that allows West Bankers to maintain family and economic links to the Arab world.

But security on the bridge is tight to prevent smuggling of weapons to Israel. All Arabs - unlike foreign tourists - must undergo extensive body searches when returning home. Often this is humiliating; unpleasant ''bridge stories'' can be heard at almost any Palestinian family gathering.''I couldn't bear to take off my underwear so I returned back to Jordan,'' one Palestinian doctor recalled ashamedly.

* Through fears for their children. Parents worry constantly that a son or daughter may be called in for questioning by Israeli authorities about political activities, whether or not the youth was actually involved.

Almost no family is without a young relative who has been detained. Leila's brother was stopped at the Jordan River while leaving for a holiday in Europe. Only two weeks later did the family find out - by chance - that their son was in prison. He was released after a month with no charges having been pressed.

* Through collective punishment. Only three years ago most ordinary Israelis, and government officials, denied collective punishment ever took place. Now the necessity or advisability of its use is debated openly in the Israeli press.

It involves such techniques as mass roundups of people and 24-hour curfews in Arab villages, refugee camps, or towns where Israeli soldiers or settlers have been attacked, even though the attackers may be unknown; and blowing up of the houses of relatives of suspected activists in the Palestine Liberation Organization.

Israeli Defense Minister Ariel Sharon said on taking office that he would improve conditions for ''the peaceful population'' on the West Bank, but collective punishment has continued.

Even if occupation continues indefinitely, massive Palestinian resistance on the West Bank is unlikely. The PLO has never been able to organize effectively on the West Bank. Its ranks there are divided and often penetrated by Israeli intelligence.

But Israeli military sources say that the educational level and training of Palestinians in underground cells have improved enormously. Thus if incidents do happen, they may be more serious. Moreover, sighs one moderate West Bank politician, ''This cycle totally alienates our younger generation against Israel.''

The remaining safety valve for Israel - and a human tragedy for the Palestinians - is the continued departure of this younger generation. Even for the educated who want to stay, jobs are scarce. They must also confront lower professional standards and pay and constricting traditions in addition to the pressures of Israeli occupation.

One who has come back at substantial personal sacrifice to teach for two years is Wasif Aboushi, a Palestinian-American professor who was born on the West Bank. Like other returnees he has faced difficulties in obtaining work and residence permits.

''If the West Bank could only get back a few of its top people each year, this would make all the difference in development and leadership,'' Professor Aboushi says.

But Wasif Aboushi's dream is unlikely to come true if occupation continues indefinitely or turns into outright annexation.

Back in New York City Leila says firmly, ''I will not go back to live on the West Bank while the Israelis remain there.''

If Israel holds on to the occupied West Bank and Gaza Strip until the year 2000, it will become virtually a binational state.

Projections by the Israeli Central Bureau of Statistics show that by the end of the century Arabs will make up 44 percent of the population of ''greater Israel,'' that is, the pre-1967 state and the occupied areas.

These bare figures are at the core of many problems - social, military, and moral - that will confront Israel if attempts to negotiate the future status of the occupied territories end in failure.

An unpublished Interior Ministry survey completed in September 1980 shows the West Bank/Gaza population may be growing even faster than published figures indicate. And as the Arab population creeps up to parity with that of Jewish Israelis, Israel will be left with a bitter dilemma: Should it grant Palestinians citizenship, but in the process dilute inexorably the Jewish character of the Israeli state? Or can it continue to rule by force a hostile population nearly equal to its own?

An open-ended occupation - even with no solution in sight - offered a safety valve for Palestinian frustrations and eased the conscience of those Israelis who found occupation distasteful. The Labor Party, in power during the first 10 years of occupation, labeled occupation temporary until a formula for territorial compromise could be worked out with neighboring Arab states. No such formula emerged.

Labor's platform still calls for return of heavily populated Arab areas to Jordan, a proposition rejected as insufficient by Jordan's King Hussein. Labor leaders hold to their formula because they want to avoid permanent rule over unwilling Arabs who now number l.3 million.

But the Likud government of Prime Minister Menachem Begin insists Israel must hold the territories permanently for religious and historical as well as security reasons. Its policy assumes that the Arab population can be kept permanently under control.

On the surface, public opinion supports keeping these areas. A ''Pori'' poll commissioned by the independent daily newspaper Haaretz in April 1981 showed that 62.5 percent of Israelis opposed return of the areas - even for peace and full security.

But Israeli attitudes toward the territories have been based on two premises: that occupation was temporary but necessary for security reasons, and that Israeli occupation was liberal.

A permanent occupation based on religio-historical as well as security grounds could shake those beliefs among liberal segments of the population, creating divisions inside Israel. This process seems to have begun.

In a May 1980 editorial entitled ''No Exit?'' (and echoed in many subsequent commentaries), the Jerusalem Post, a pro-Labor Party newspaper, warned that extended occupation had an ''incendiary dynamic'' of its own. A cycle of Palestinian unrest followed by Israeli military repression, the Post said, could ''brutalize Israel's Army and corrode its moral fiber'' and ''polarize Israeli society.'' Military action, it said, cannot solve ''what is fundamentally a political problem.''

Such a cycle of confrontation could cause problems within the Army. During a series of Israeli-Palestinian clashes in the West Bank town of Hebron in May 1980, many Israeli Army reservists on duty there (every adult male does extensive reserve duty) expressed ambivalence to the press about their duties.

One insurance agent who had voted Likud in the last elections told the Monitor that he objected to the way ''settlers ignore the Army and provoke Arab attack.'' He said he hated serving in Hebron.

It is impossible to measure the extent of such reservist discontent, never mind feelings inside the regular Army. Until now most reservists who did not wish to serve on the West Bank were quietly assigned elsewhere.

Permanent occupation could also create an economic dilemma for Israel. High growth rates in the occupied territories - largely the product of salaries earned by West Bank laborers working in Israel - have leveled off.

And development in these areas has remained stagnant largely due to roadblocks posed by both Israeli and Arab government regulations. Should the occupation become permanent, it could institutionalize a situation in which Arabs became a permanent corps of manual laborers inside Israel with no chance of advancement at home.

Should Camp David fail and Israel decide to keep - or formally annex - the West Bank, these problems would multiply. Mr. Begin has proposed offering West Bank and Gaza Arabs citizenship, a proposition they would probably turn down.

If they accept, they could ultimately become the majority in a binational state, a proposition not so different from suggestions made by PLO chief Yasser Arafat.

The alternative for Israel would be to deprive its new citizens - or its noncitizen subjects - of full civil rights, thus raising charges of creating a Bantustan. Neither option offers easy choices to Israel.