Arena Stage's new production of "The Caucasian Chalk Circle" is by far the most dynamic realization I have ever seen of Brecht, the theoretician and playwright. It also is the most authoritative and gripping Brechtian performance of all those I have seen in the United States and Britain, though granted I have not seen Brecht at East Berlin's Berliner Ensemble.

Here, one thinks, is the essential, paradoxical Brecht - didactic yet emotional, removed but involved. John Holmstrom's English translation used in this production also opened the same theater in 1961

Now the use of Arena's performing space is more fully understood. Designer Santo Loquasto uses its floor - where after all our eyes are focused - to reflect the play's rough, but sophisticated texture. Martin Fried's production is infinitely more complex than the one that christened the stage: so complex, indeed that by deferring its opening five nights. Arena producer Zelda Fichandler undoubtedly insured the work's overwhelming flow.

For a long, two-pronged work, this sense of splashing assurance reveals, as much as any other single example, how Fichandler has guided her theater so gradually yet so firmly in artistic integrity.

Brecht, too, has been clarified over the 16 years.

Written in Santa Monica during his self-exile from Hitler's Germany in 1944-'45, "The Caucasian Chalk Circle," one of his final completed works, is a play-within-a-play. We are introduced to wartime Soviet Georgia, where farmers are arguing about battle plans and irrigation projects. Conflicting ideas have been exchanged for hours, and now there is a respite for entertainment. A folksinger tells a relevant, centuries-old parable acted by the villagers.

The first story concerns a feudal uprising during which the governor loses his head and because she is greedy for flight, his wife will lose their baby son. But Grusche, a young servant girl, is unable to leave the helpless infant, and takes him with her at great peril. In comparative safety, her marriage is arranged to a draftdodger, giving the anonymous heir at least the safety of a name though that means Grusche seems to be faithless to Simon, a soldier who gave her his mother's cross.

The second story centers on Azdak, a drunken scribe accidentally hides the Georgia Grand Duke during the unrising an action which promots his conscience to demand punishment. Bored, joking soldiers, who gain control, force him to take the place of the provincial judge, who has just been hanged.Azdak is amoral, obsequious and takes all bribes he can force, but inevitably he decides in favor of the poor or downtrodden.

Now, years later, with the revolt quashed and the old order in control the baby, now a healthy boby, has been found. Azdak must decide to whom he belongs. He draws a circle and commands the two mothers, the true and the adopted, to pull the child in her direction. Brecht has a variation on Solomon and the old Chinese legend. He will award the boy to the mother, who does not pull for fear of harming him. He rules: "Things should belong to those who are good for them; the children to those who are motherly . . . and the valley to those who will irrigate it and make it fruitful."

To Loquasto must go credit for the production's mobility of design and the raw-textured costumes that blend the barbarie dress of the past with the plain garments of the recent war.Stanley Walden's new score for the songs Brecht always jammed into his plays is for guitar, violin, woodwind and percussion. The songs are haunting, wispy and effective for voices accurately described as adequate to them. When indicated, there are added sounds, such as birds chirping and water [WORD ILLEGIBLE] that are projected with startling charity.

Robert [WORD ILLEGIBLE] is his finest work totally free, brawling rapacious and earthy. His unpredicable rogue is rooted in inscrutable sympathy, a roaring sensitive slob. As Azdak's opposite, Grusche is moral and courageous. Christine Estabrook in the part rings wholly true, as impressive in her bridge-crossing scene as she is forthright at the chalk circle.

There are other finely hored performances in the scores of characters: Terrence Currier's folksinger; Stanley Anderson's sly brother; Veronica [WORDS ILLEGIBLE] Robert Murch's cynical soldier, Halo Wines [WORD ILLEGIBLE] governor's wife and Peter Phillip's brave Simon.

Above all, through all the hearty, earthy, [WORDS ILLEGIBLE] true in this extraordinary, rivoting production, a rare fusion of the dramatic arts.