Israel assails British moves in Mideast. Arms sales to Arabs and invitation to PLO draw harsh response

Britain's decision to sell arms to Arab states and invite members of the Palestine Liberation Organization to London has provoked a harsh Israeli response. Israeli Acting Foreign Minister Moshe Arens summoned British Ambassador Clifford Squire to the Foreign Ministry Monday and expressed ``Israel's deep displeasure over the deviation in Great Britain's policy in the Middle East,'' Mr. Arens told reporters.

The Israelis objected to Britain's announced $4.4 billion arms deal to Saudi Arabia and $360 million arms sale to Jordan. Arens also took issue with Prime Minister Margaret Thatcher's decision to invite a joint Jordanian-Palestinian delegation to London for talks on King Hussein's peace initiative. Mrs. Thatcher specifically invited PLO Executive Committee members Mohammed Milhem and Bishop Elias Khoury as the Palestinian members of the joint delegation.

``It was a horribly timed move by our British friends,'' said one dismayed Western diplomat in Tel Aviv.

Both the Americans and the Israelis have tried hard to convince Jordan's King Hussein that the PLO, which Israel rejects as a terrorist organization bent on the destruction of the Jewish state, is not a suitable peace negotiating partner.

Britain's decision to meet with PLO members is regarded by American and Israeli officials as an embarrassing shift away from the American approach of forcing the PLO either to publicly accept Israel's existence and renounce violence or to step out of the negotiating process.

Thatcher said that meeting with Mr. Milhem and Bishop Khoury should not be construed as British recognition of the PLO. She characterized the two Palestinians, both of whom were expelled by Israel from the Israeli-occupied West Bank several years ago, as ``men of peace.''

``The matter of recognition or not is really a semantic issue,'' said Yeshayahu Anug, an Israeli Foreign Ministry spokesman. ``If you deal with somebody, then you help them more than formal recognition.'' The British decision, Mr. Anug said, disrupts ``a process we regard as very healthy for the region, which is the denigration of the PLO.''

Anug's comments pointed out a basic difference between the British and the American-Israeli analysis of the chances for peace negotiations without the PLO. British diplomats in the region have long maintained that King Hussein cannot move the peace process forward without the PLO, which, militarily destroyed and dispersed by Israel's 1982 invasion of Lebanon, is still recognized by all Arab states as the only representative of the Palestinians.

Jordan has repeatedly told the US that PLO involvement lends legitimacy to negotiations with Israel over the fate of the West Bank. The Israelis insist that there can be Palestinian involvement without the PLO.

Hussein's peace efforts ran into a brick wall with the Americans recently when the King submitted a PLO-approved list of Palestinian delegates to the Americans as potential members of a joint Jordanian-Palestinian team.

The Americans found only two names devoid of PLO connections and refused to meet with the team unless PLO chairman Yasser Arafat accepted UN Security Resolutions 242 and 338, which imply the acceptance of Israel and the principle of exchanging land for peace.

If Thatcher had hoped her move would nudge the Americans into meeting with a joint delegation, Western analysts here said, that hope was unfounded.

``The Murphy meeting is dead,'' one analyst said flatly. ``The hope now is pinned on the King coming up with some new ideas when he goes to Washington.''

Egyptian President Hosni Mubarak was scheduled to meet with President Reagan on Monday. Hussein comes to Washington later this this month, followed by Israeli Prime Minister Shimon Peres next month.

Mr. Peres, still planning on his scheduled visit to Britain early next year (according to one of his aides), is sending a letter in response to a letter from Mrs. Thatcher explaining Britain's recent moves. The Peres letter, one aide said, will repeat Israel's strong objections to the arms sales and to the invitation to the joint delegation.

Relations between Israel and Britain have often been strained in the past -- by a British ban on arms sales to Israel imposed after the 1982 invation of Lebanon, by the British refusal to sell North Sea oil to Israel and by its protests of Israeli arms sales to Argentina.