Israel's evacuation of the Sinai leaves intact a confrontation in the south of Lebanon that could yet produce another Mideast war. A cease-fire between warring Israelis and Palestinians has held since an American envoy, Philip Habib, arranged it last July. But both sides seem to be itching to break it.
Yasser Arafat, the PLO leader, has pledged not to let the cease-fire harden into the permanent truce Habib was seeking. He says the PLO will be free to resume shelling and raiding when the current agreement expires in July.
Ariel Sharon, the Israeli defense minister, does not want to wait even until July. But so far he has been restrained by Prime Minister Menachem Begin.
From the perspective of both the PLO and the Israeli government, transformation of the cease-fire into a long-range truce is in the other side's interest. Strangely, each makes a logical case, though whoever wins another slugfest in the Middle East, the United States would surely lose.
Arafat's position is that by accepting an indefinite truce, the PLO tacitly acquiesces in the regional status quo, which is precisely what Israel wants. Having taken the West Bank in 1967, Israel has no further demands to make upon the Palestinians. In the absence of Israeli concessions to Palestinian nationalism, the PLO's agreement to a truce would certify Israel's right to enjoy the fruits of the occupation.
Arafat has no illusions about the PLO's ability to resist an Israeli invasion, but that is not the issue. The PLO long ago gave up hope of winning militarily. It welcomes war for the reason Anwar Sadat did in 1973, to improve the prospects of reaching a settlement through diplomacy.
The Palestinians in the south of Lebanon would suffer mightily from an Israeli invasion. But their suffering, as Arafat perceives it, would touch off a chain of events from which the Palestinian cause could only benefit. Stagnation, he believes, is costlier than military defeat.
Arafat's strategy also counts on an Israeli reaction. Sadat did not win the Suez war, but he bloodied the Israelis badly enough that they found it in their interest to negotiate an agreement. In Lebanon, the Israelis consented to the current cease-fire only after PLO shells inflicted heavy casualties on several of their border villages. Arafat argues that if PLO arms can persuade Israel that it cannot ignore the Palestinian cause with impunity, Israel will agree to an accommodation.
Sharon is more than willing to take up Arafat's challenge. What he sees is that, since the cease-fire, the PLO rather than Israel has pursued its objectives with impunity. The PLO has substantially increased the size of its military contingents and, with Soviet and Libyan help, has built up a force of more than 1,000 tanks and artillery pieces.
Sharon knows as well as Arafat that this army is still no threat to Israel's military superiority. But it has become strong enough to exact a toll on the battlefield and, more importantly, to create fear in the border settlements. It has become a threat not to Israel but to its freedom of action. Sharon would destroy it before it grows any stronger.
What's hard to see is the strategic concept behind Sharon's approach. Unless the Palestinians totally surrender their nationalist visions, the Israeli army will have to keep attacking, for as far into the future as one can see, to destroy each buildup as it occurs. But such a strategy precludes peace, and each attack brings the prospect of enlarging the perimeter of war.
That, of course, suits Arafat's purposes precisely. He yearns to reunify the Arab world around the one issue, Israel, on which Arabs can agree. He believes he can persuade the Saudis to turn off the oil faucet. He would hardly be troubled at seeing President Reagan's notion of a Middle East anti-Communist bloc shatter.
It's a strange challenge for a peacemaker: Arafat and Sharon, daring each other to swing first, playing fast and loose with the equilibrium of the Middle East, while the United States tries to keep them apart.
But the United States needs more than an argument. It needs a policy that goes beyond promises of ever more arms for the region, accompanied by mild rejoinders to the Israelis when they are naughty enough to use theirs. It needs a policy aimed at peace.