State survives, but what about dream? As Israel enters its fifth decade, turmoil in the occupied lands has laid bare the country's deep divisions. A three-part series examines whether Israelis can unite on a common goal beyond survival.

It was supposed to be a birthday party. Yet the celebration of Israel's 40th anniversary on April 21 - centering on a reenactment of the proclamation of ``a Jewish State in the Land of Israel'' - so far has had more the feel of a wake.

``It's as if we're trying to make ourselves feel better,'' says a young Israeli architect. The mood, agrees veteran diplomat Abba Eban, is ``of tension, doubt, heart-stirrings.''

The sense of uncertainty has been building for months. It is made only more glaring by the suddenness with which last weekend's assassination of Palestine Liberation Organization deputy chief Khalil al-Wazir (Abu Jihad) sparked what one Tel Aviv woman terms ``a post-Entebbe elation.'' Israeli sources say the state ordered the attack.

By late last year, a pair of scandals - the cover-up of the killing in custody of a Palestinian terrorist and the uncovering of Israeli-paid spy Jonathan Pollard in the United States - had led some Israelis to voice concern that their country was losing its sense of purpose and direction.

Then, on Dec. 9, a few hundred Arab youngsters from the Gaza Strip clashed with Israeli troops. Protests had erupted before in Gaza, and on the West Bank of the Jordan River, since Israel's capture of the territories in the Six-Day War of 1967. But this time the rioting persisted, despite Army truncheons, tear gas, rubber bullets, and even live ammunition.

Eighteen weeks of the Palestinian ``uprising'' have not endangered the state of Israel. But the violence, and the search for a response to it, have laid bare deep divisions in Israel over the very identity and aims of the state David Ben-Gurion proclaimed in 1948.

Some sense of shared accomplishment does persist. The Jews of Israel - heirs of an ancient people that endured exile, discrimination, and finally Holocaust, before returning to this rugged land - have built a powerful country. It is a place of microchips and drip irrigation, luxury hotels and fighter jets.

``Forty years is not so long a time,'' says a Tel Aviv housewife who arrived here as a child from the Soviet Union in the 1930s. ``People forget - Jews outside Israel forget - that what we have built here is a haven against a world that has, to put it mildly, not always been friendly to us.''

``Little Israel,'' says George Washington University historian Howard Sachar, ``has, despite all its problems, survived.'' Survival of the dream

Yet has the dream survived?

It is tempting to read Israel's present crisis as proof it has not. Yet the very question (generally asked, for dramatic effect, by grizzled socialist pioneers on the kibbutz farms of the Galilee) is predicated on a myth.

``There never was a single dream of Israel,'' explains a Hebrew University political scientist, Naomi Chazan. ``There were always different dreams of what Israel should be.''

Ben-Gurion's was but one dream. He envisaged a state that would be not merely Jewish, but socialist. It would know how to fight, but try incessantly to avoid doing so.

It would prefer to control all of Palestine. But if getting less was the price for statehood, Ben-Gurion believed, so be it. As for the Arabs, he was sure they would come to respect, accept, and ultimately benefit from Israel. Jabotinsky's heirs

Vladimir Jabotinsky disagreed. Although this arcane Russian Jew died nearly a decade before Israeli statehood, it was his Revisionist Zionism to which today's Israeli right wing is heir. His vision: a non-socialist state rooted in 19th-century European liberal values; powerful, embracing all of historic Palestine, on both sides of the Jordan River. As for the Arabs, he saw Ben-Gurion's assumption of coexistence as naive. The Arabs would oppose Israeli statehood until they saw there was no practical choice.

And although neither Ben-Gurion nor Jabotinsky was by inclination religious, both sought a political edge by catering to the vocal, Orthodox minority that opposed creating a secular state. The Orthodox also believed, for biblical and not only practical reasons, Jews must control all the ancient Land of Israel.

In the first years of statehood, internal ideological differences were virtually moot. The combination of a continuing Arab military threat, and the open wound of the Holocaust, united Israelis in what Rafael Moses, director of Hebrew University's Freud Center for psychological studies, calls a ``spirit of fighting victimhood.''

The Holocaust - with the Arab threat posited as a potential second one - became Israel's national symbol. The national monument, Yad Vehsem, was a haunting Jerusalem memorial to 6 million dead. Survival - within post-1948 borders excluding the West Bank and Gaza - was all that mattered. It provided consensus enough.

In 1967 everything began to change. In six days, Israel sliced through the armies of three neighboring Arab states - capturing, along the way, the West Bank and Gaza, with their more than 1 million Palestinians.

Survival could no longer suffice as a national goal. Which Israel did Israelis want: Ben-Gurion's or Jabotinsky's? What should be its borders? And what of the now magnified problem of coexistence with Palestinian Arabs who claimed the Land of Israel as their own?

``I remember, just after the 1967 war, there was a big military parade,'' says a Tel Aviv woman who describes herself as a Jabotinskyite. ``There used to be a parade every year. I used to love to take the children. There was a nice atmosphere, everyone outdoors together.''

``The 1967 one, I believe, was the last. Because after the war there began to be questions inside Israel, between Israelis ... over the territories, and on whether it was proper, also, to have a military parade in Israel. I miss the spirit before 1967,'' she says.

Israel's ruling Labor Party seemed in no great rush to hand back land won in the war - if only because this included the site of the ancient Jewish temple in the predominantly Arab, eastern portion of Jerusalem. But Labor did hope eventually to trade a good part of the captured land for peace, which, they figured, the Arabs could no longer realistically delay.

The Herut Party of Menachem Begin, perennially in opposition as the declared heirs of Jabotinsky, wanted to keep all of the West Bank. Herut saw the battlefield triumph as a chance for Israel to start anew: to establish itself as a powerful, non-socialist state in whose pride all Jews could share. It was a dream that attracted more and more adherents. Among them, Orthodox Jews who were increasingly uneasy with a 20-year alliance of convenience with Labor; and, most important, a Sephardic underclass resentful of Labor's European-socialist cronyism.

The challenge to Labor built, year by year. When in 1973 the Labor government of Golda Meir was taken by surprise in a joint October military strike by Egypt and Syria, the party's political reckoning was clearly only a matter of time. The reckoning came in 1977. Mr. Begin became prime minister.

On the surface, the effects of Begin's nearly eight-year tenure are straightforward: peace with Egypt, and a pledge of ``autonomy'' for Palestinians; unprecedentedly wide Jewish settlement on the West Bank; and a steadfast refusal to consider Arab sovereignty there. Last of all, there came a costly war in Lebanon that contributed to Mr. Begin's sudden retreat from office in 1983. Internal political debate

Yet perhaps the most important, long-term effect of Begin's jolting departure from three decades of uninterrupted Labor Party government was to draw the battle lines for the internal political debate now under way.

That debate may be only beginning. Hillel Kook was one of a handful of dissenters in 1949 when Israel's Constituent Assembly transformed itself into a knesset (parliament) - instead of drafting the constitution for which it was convened. Today, Mr. Kook senses a continuing reluctance among Israelis to face up to central issues of their own national definition.

Israel still has no constitution. In its absence, the identity cards that all citizens in pre-1967 Israel carry stipulate separate Jewish or Arab ``nationalities'' in a nominally Jewish state.

The Palestinian uprising is forcing the clash between rival Jewish and Arab nationalisms to the top of the Israeli political agenda. ``Denial'' of the problem, says Professor Moses, has been replaced with ``a new degree of recognition on both sides.''

``The situation magnifies the existential questions of the past forty years,'' maintains Professor Chazan. ``It forces us to avoid what we've been doing, to deal directly with the issues.''

Next: Factoring Arabs into the political equation.