THE CARTER ADMINISTRATION was smart to abort its plan to sponsor its own resolution on Palestinian rights in the Security Council. Any resolution even marginally tolerable to the Israelis would have been scorned by the Palestinians, and vice versa. A resolution not tolerable to the Israelis would have so heightened their distrust of the administration as to put at unbearable risk the prospect of the Egyptian-Israeli talks break down, it will be helpful to use the United Nations, a body currently tipped almost as much against Egypt as against Israel, as a forum for Mideast negotiations. But for the time being, the forum should remain the Egyptian-Israeli talks. Was it in discreet recognition of this fact that the Security Council, professing to be doing Andrew Young a favor, chose not to press a new Palestinian resolution at this time?

There is no particular reason to linger long over this latest up-the-hill, down-the-hill embarrassment suffered by the United States. The priority must not be to demonstrate that the Egyptian-Israeli talks can produce solid progress toward the autonomy envisaged at Camp David. For considerations of prestige no less than diplomacy, the administration needs badly to demonstrate this. Egypt needs to demonstrate it in order to reduce the isolation from the Arab mainstream that still constitutes the most troubling threat to its own continued adherence to peace. Israel needs to demonstrate it to prove that, in protesting the United Nations route, it was not merely trying to back out of its commitments on Palestinian autonomy.

It is worth saying again: Menachem Begin's crimped views on autonomy dominated the language that Israel, Egypt and the United States accepted at Camp David. But at the same time, as Mr. Begin's critics on the right have not let him foreget, he did agree to submit the initial autonomy and then the "final status" of the West Bank and Gaza to a negotiating process whose outcome Israel agreed not to foreordain. That leaves only a sliver of wiggle room in which negotiations can proceed. But in that tiny space, and only there, lies what promise the negotiations hold. This is not to say there are no problems of Egyptian fidelity to Camp David. Egypt appears out of bounds, for instance, in asking that Palestinians outside the autonomy areas be entitled to vote in autonomy elections. But the question of Israeli fidelity is, for obvious reasons, more urgent.

This is not the place for a detailed analysis of Israeli obligations under Camp David. The central point is that the accords give Israel no warrant to demand that its own military government rather than the new negotiating framework should be the source of authority for the autonomy regime. The danger is that it rationalizes the Israeli claim to go on settling Jews in the West Bank and Gaza and to requisition and even expropriate Arab land for that purpose. Nothing proves more conclusively to Israel's friends and would-be partners in peace that it is acting in bad faith than its settlements policy. The settlements are nails in the Camp David coffin. They expose as a sham Israel's claim to be striving for peace.

If it is fair for the United States to ask the PLO, as it has, to recognize Israel's right to exist, then it is no less fair to ask Israel its settlements. In their political contexts, the two steps are surpassingly and equally difficult. They are also essential prerequisites for the two peoples to persuade each other of their readiness for peace.Mr. Begin is about to meet Anwar Sadat again, in Haifa, in order to move the so-far stalemated autonomy talks. That is the time and place to show the wisdom of keeping these talks as the main forum of peace-seeking in the Middle East.