Papandreou puts out Greek welcome mat for PLO's Arafat

''It is difficult for foreigners to understand our policy toward the Arabs, a policy based on a traditional friendship and long-term interests,'' said former Greek Premier Panayotis Kanellopoulos, historian, philosopher, and senior member of Parliament.

So far, Greece, is the only member of the European Community (EC) to give full diplomatic recognition to the Palestine Liberation Organization (PLO). Since the Socialists came to power in October 1981, the nation has vocally supported Palestinians in international conferences and, after the PLO withdrawal from Beirut this month, Greece agreed to treat some of their wounded fighters.

PLO leader Yasser Arafat also chose Greece as his first stop after leaving Beirut. A PLO spokesman said the decision to go to Greece first was ''a deliberate gesture to criticize all the Arab leaders for their stand during the siege of Beirut. . . the Greek government showed more interest than any other.'' Mr. Arafat met with Premier Andreas Papandreou after landing on Greek soil Sept. 1.

Until the Panhellenic Socialist Movement (PASOK) came to power, Greece, despite its pro-Arab stand, has maintained a balance in its relations with the Arab world and the state of Israel.

As former Foreign Minister Konstantine Mitsotakis, now parliamentary whip of the New Democracy opposition party put it, ''our pro-Arab stand was not motivated by anti-Semitism or anti-Zionism.''

''We have an affinity with Jews. We sympathize with them. We are both people of the diaspora,'' Mr. Mitsotakis said.

Mr. Mitsotakis pointed out that Jews were never persecuted in Greece and during World War II. When the Nazis carried out their extermination program, Greek Jews, who decided to hide instead of giving up, found shelter among Greek families and survived.

Despite the de facto recognition of Israel by Greece ''this country kept a balanced policy vis-a-vis Arab states and Israel,'' Mitsotakis said. This balance was upset by PASOK, he stated.

Immediately after coming to power, PASOK extended full diplomatic recognition to the PLO. As a result, the PLO information bureau was promoted to a diplomatic delegation and its head, Shawki Armali became an ambassador.

Soon after that, Mr. Papandreou welcomed Mr. Arafat in Athens. The PLO leader was given a welcome befitting a head of state and he shocked Greeks as he landed by helicopter at the Athens Olympic stadium, surrounded by armed members of his personal guard.

When the Israeli attack against the Palestinians was launched early this summer, Papandreou received Farouk Kaddoumi, head of the political section of the PLO and assured him Greeks will give the Palestinians ''whatever we can.''

He also condemned Israeli aggression in Lebanon and compared the action of the Israeli Army to Nazi crimes.

''Nazi crimes against the Jews, condemned in the conscience of the entire world, are today being repeated by Israel against the proud and heroic Palestinian people.''

Papandreou's government offered troops to participate in an international peacekeeping force in Lebanon, was prepared to place ships at the disposal of the Palestinians for their evacuation, and provided 200 to 300 beds for the treatment of wounded Palestinians.

Both political observers and foreign diplomats, have seen this strengthening of Greece's pro-Palestinian position as an effort by the present government to cure the country's economic ills through Arab help and with local investment of petrodollars.

Earlier governments, including the military dictatorship and the democratic governments that succeeded after 1974, set the groundwork for closer economic relations.

In 1976 a Greek-Arab bank was founded to promote Arab investment in Greece and a new impetus was given to the Greek-Arab chamber of commerce.

As a result, Greek exports to the Arab world increased. In 1977 they covered 21 percent of the total Greek exports and in 1981 rose to 26 percent. Still they accounted for only 1.5 percent of total Arab imports.

In actual figures, exports to Arab countries are second only to EC countries and amounted to $1.07 billion in 1980 and $1.08 billion in 1981. Greece imports most of its oil from the Arab world and its imports fell from $2.3 billion in 1980 to $1.6 billion in 1981.

Greece also had many of its construction companies working in Arab countries, especially in Iraq, Saudi Arabia, Lebanon, and Libya.

This was a good source of foreign currency for Greece, ever since the late city planner, Konstantine Doxiedis, started building new towns or labor housing in Iraq in the early 1950s.

Muhammed Sayed, the Arab League's representative in Greece believes that Greece has the ability to compete with other nations for the Arab markets, especially because of its proximity to the Arab world.

Greek exporters, however, believe that they should be given favored treatment by Arabs, similar to that they have extended to them.

As a retired ambassador who served in the Arab world said, ''We had large communities in various Arab countries who had grown native but still needed our support.''

Over 250,000 Greeks lived in Egypt until the nationalization program of foreign business hit them in the 1950s and 1960s. Now there are under 10,000 living mainly in Cairo, while in Alexandria a Greek Orthodox patriarchate still survives.

There is also a Greek Orthodox patriarch in Jerusalem, while the Greek Orthodox patriarchate of Antioch in Damascus is in Arab hands.

''It was these communities and the patriarchates which influence our pro-Arab policies and it is the ideological relationship between PASOK and PLO that dictates our present stand,'' said the former diplomat.