IN THE PAST, Israelis have been sustained by their ability to take a sober look at the reality confronting them and to fashion their actions accordingly. In the West Bank, though, the current Israeli approach can be characterized only as self-delusion, an effort that is doomed to failure.

At the moment, the Israeli government is removing the popularly elected and popular Arab leadership of the West Bank (which has close ties to the PLO) and preparing to replacing it with more "moderate" leaders who will be more amenable to Israeli policy.

In trying to shape Palestinian leadership to suit their own purposes, the Israelis are resorting to a time-honored technique of colonial powers. They might even entertain hopes of success were it not for one salient consideration: Israel's ultimate adversary is not the Palestine Liberation Organization but Palestinian nationalism, which the PLO has come to embody. If Israel is sincere in wanting to construct a viable, indigenous, moderate alternative to the PLO, then Israel has to be willing to accept as the end result some form of Palestinian self-determination. This is a goal that the Begin government does not accept. And it is likely that every time a moderate Palestinian administration makes nationalist statements, it will be accused by the Israeli government of being tainted by the PLO.

This pattern is a familiar one. It is essentially the course followed by the French in Indochina.

The French, remember, had their rule in Indochina broken by the Japanese during World War II. After the war was over, the French tried to reinstitute their control for eight years, from 1946 until 1954. The core of Vietnamese resistance to French colonialism was the emergence of a nationalist movement, determined to bring self-determination to Vietnam.

The French recognized that they could not rule Vietnam directly. So they tried for eight years to find a Vietnamese government that would bend to French direction while retaining its ability to command popular support. Those two goals proved to be mutually exclusive. What the French found, instead, was that a Vietnamese government that did France's bidding did not have popular support, and that a government with popular support would not do what the French wanted. As a result, governments came and went in Vietnam like the change of seasons.

It was not unwillingness to apply harsh measures that ultimately forced the French to withdraw from Indochina. Ultimately, France's heavy hand in Indochina sparked opposition at home among citizens who found the repressive measures and the war being fought insupportable.

The Israeli government may well find Palestinians willing to take the place of incumbent mayors and other officials on the West Bank whom the Israelis find too closely allied to the PLO. What, however, will Israel do with those former officials once they are removed from office? Will they be allowed to remain in their towns and villages, moving among the population, speaking privately -- and perhaps even publicly -- about the administration that replaced them? In that case, it is a fair bet that these former officials will not lose an opportunity to attack their replacements and to sow discord.

Will Israel deport the former officials as it has done from time to time in the past, giving them the occasion to travel abroad as examples of how Israeli democracy deals with dissidents and also giving them a chance to broadcast inflammatory statements over radio stations operating out of Lebanon, Syria and Jordan and listened to daily in the West Bank?

How, in the face of unremitting pressure from the PLO outside the West Bank, will the new Palestinian regime on the West Bank establish its credentials with the Arab population? The rise of a Palestinian nationalist movement on the West Bank, after all, has occurred during a period of unprecedented prosperity for its Arab citizens. Bread alone has not satisfied them. Not only the French, but the British, the Belgians, Americans and perhaps even the Soviets have learned that nationalism is a powerful and ultimately irresistible force. The sentiment for independence and self-determination on the West Bank goes deep and it will take more than a simple change of faces to satisfy it. Ultimately, the Palestinians will be satisfied only by changes that leave them in control of their own destiny.

That, of course, suggests the possibility of a Palestinian state, or some form of federation with Jordan, or some other arrangement not yet on the table. Israelis are concerned that a Palestinian state on the West Bank would not be the end of the matter, but only the beginning, whetting Palestinian appetites rather than satisfying them. Those concerns ought not be belittled. There are no angels in the Mideast. Israelis have good reason to doubt the peaceful intentions of the PLO when it consistently undermines or attacks any statement by anyone purporting to speak for it that holds out the prospect of peaceful coexistence with Israel.

Yet Israelis also ought to be looking at what happened in the West Bank and within Israel itself in the past two weeks. The violence on the West Bank sparked a crisis that almost brought down the government. Although other factors besides the West Bank were at work, the tie vote in the Knesset reflects a real split within Israel over the government's policies. Two of the three leading Israeli papers -- Ha'aretz and the more conservative Ma'ariv -- have been critical of the government's policy. The English-language Jerusalem Post also has attacked it. A majority of Israel's Jewish population may well support its government's approach on the West Bank, but a substantial and influential minority is also deeply opposed to it. Israel's occupation -- or administration -- of the West Bank is and will continue to be a divisive issue in Israel.

Israel is in an unenviable position. None of the possible courses it can take looks promising or desirable. The least promising and desirable course, though, is to continue the present policy, looking for ways to maintain its grasp. Within Israel, this argument has been going on since Israel gained control of the West Bank and Gaza Strip in the Six Day War in 1967, and -- coincidentally -- made possible the emergence of a Palestinian nationalist movement. Even though the demonstrations will die down, Israel can expect them to flare up again, and each time the pressure on Israel to withdraw from the West Bank will increase. Sooner or later, under conditions impossible to foresee, that pressure will become irresistible.

One final matter for consideration. A people seeking to suppress another often, perhaps inevitably, finds its own equilibrium disrupted. When opposition grew within France to the effort to snuff out the nationalist movement in Algeria, the violence was imported to France. That has not yet happened in Israel, but Israelis have raised warnings about the consequences of continuing the present course.

"For all the shame and pain we feel over the harm done to us by our neighbors because of anachronistic perverse policies," the late Israeli historian Jacob Talmon wrote Begin in 1980 in an open letter, "our fear should be greater over what these acts will do to us, to the Jewish people and to our dream of social and moral justice and renaissance. For this dream was one of the vital and beautiful aspects of Zionism, setting it apart from other national liberation movements. The desire to dominate . . . leads to perpetual fear and mistrust of the subjugated people and creates terrible temptations that are stronger than any subjectively good intentions."