IF PRIME MINISTER Begin is smart, he will use the occasion of the court-ordered halt of Israel's new West Bank settlement to start shifting his policy in a reasonable direction. The settlement at Elon Moreh, the first launched since the Egyptian-Israeli peace treaty, was planted in a lightning military-supported operation on June 7. Why the sneakiness?To keep the Arabs whose land was being taken from obtaining a high court injunction first to halt the settlement. But those landowners obtained a high court order later. It bans further construction in Elon Moreh and gives the government one month - which summer slowdowns may stretch to two or three - to show why the place should not be dismantled. The pause is a statesman's dream;.

Is Mr. Begin a statesman? So far, to be sure, he has seemed bent on following a course that would 1) appease the right-wing fanatics, such as Agriculture Minister Ariel Sharon, supporting an untrammeled settlement policy and 2) provoke a degree of Palestianian resistance to the autonomy negotiations that would kill those talks and leave Israel just with a separate peace, however shaky, with Egypt. That this is Mr. Begin's real agenda is strongly suspected by many Israelis, including those who support him for precisely that reason and those in the "peace movement" who do not. Settlements constitute only one element and in some ways not the most important element in Israel's West Bank policy - the destruction of Palestinian institutions like now-closed Bir Zeit University, for example, may be more sinister - but settlements are the most conspicuous aspect of the policy and the one around which political debate centers.

The debate in Israel doubtless will be, and should be, the principal medium in which Israeli policy is further thrashed out over the summer. It is not irrelevant, however, that the Begin policy is now regarded as wrong and unhelpful not just by the American government and, according to the polls, by most of the American people but also by major elements of the American Jewish establishment, long regarded as the bulwark of Israel's American constituency. It seems evident that, by the policy toward Palestinians that the settlement issue symbolizes, Israel is losing what is unquestionably its chief asset in the United States - its claim to be in the right. Israel's perceived moral advantage is being undermined.; The Palestinian cause is gaining in credibility.Such a consideration needs to be injected into the Israeli debate on Elon Moreh.