ISRAEL BEGAN installing a new civilian administration on the West Bank last month, and almost daily since then Palestinians have been demonstrating against it. The Begin government sees its plan as a way to demilitarize the occupation and, beyond that, to prepare the way for local Palestinian moderates to come forward, outflanking the PLO. But a good number of Palestinians see the plan as a trick. Their strategy has been to provoke the Israelis into showing a military hand and into showing it in a way, before the international media, calculated to make Israel look arbitrary and repressive to the world. Israel has played perfectly the role assigned to it. It has locked up 12- year-olds for throwing stones, imposed the collective punishment of closure on Bir Zeit University, suspended the newspaper Al-Fajr and so on. The resistance has not appeared so innocent, the occupation so unjust, in some time.

It is a dismal scene. But it is, at the same time, theater. Everyone in the Middle East knows it, though not everyone outside. The Israelis can bring overwhelming power to bear in the West Bank. They are not going to yield on their vital interests because of a few weeks of protest scenes on American TV. And in a few weeks the protests will fade from American screens, if not all at once from Bir Zeit, Ramallah and Gaza. The situation will be back to "normal," which consists of an occupation that brings considerable benefits, other than political, to many Arabs, and a resistance that keeps the flame burning but gives the occupiers only brief pause. There is a stalemate: the occupation cannot defeat the will of the Palestinians, the resistance cannot throw off the rule of the Israelis. By their respective tactics they can add to the quotient of misery in each other's lives, but they cannot make a basic change.

That such change should come about goes without saying. It is dangerous to American interests to have the Palestinian-Israeli problem fester without end. There is, however, only one way change can come about: by agreement between Palestinians and Israelis. And only one diplomatic channel or process by which such agreement can be sought: Camp David. The problem there, of course, is that the Israelis guard the door to Camp David, andthey are taking an open and rigid position against Palestinian self-determination, which is the Paltestinians' natural and proper goal.

Eventually Israelis or Palestinians must grant each other full political recognition, but it seems just too much to expect that to happen at this time. The formulas that keep being suggested to accomplish this bit of magic all seem gimmicky and unreal. Nor is it in the cards for the Americans and, say, the Saudis to collaborate in a big mutual squeeze of Israelis and Palestinians--the other familiar scenario. That leaves only a much more limited prospect. Perhaps widsom consists of coming to terms with it. Perhaps this is the moment for a general lowering of sights.

So far the Israelis have not made an offer that any self-respecting Palestianian could accept. If things go on that way, the Palestinian autonomy talks with Egypt and the United States will surely fail, and most of the onus will fall on Israel. The Israelis must sweeten their offer substantially. If they do, the Palestinians should be encouraged to take it. They may curse, but let them take it--if they do not, most of the onus wil fall on them. Then let everyone watch what develops. Allow a little time for Israelis and Palestinians to work into what must be at least a somewhat different pattern from the one that both of them find unsatisfactory today.

It is follish to be optomistic in the Middle East. It is even more foolish to be categorical. Is there not merit in this more modest approach?