IT IS AMAZING the power we have to delude ourselves. We take a situation, describe it as we wish it to be, never mind the reality, and proceed from there.

Take the Middle East. The official issue is the Palestinian problem; Israel must be more flexibile; King Hussein can and must be brought into the peace process; in time, Israeli settlements on the West Bank will be dismantled (or evacuated); Jerusalem will have to become some sort of international city. That's the delusion.

What seems closer to reality is this: the peace process has just about been completed; the shape of Israel for generations to come has already been determined; King Hussein has little to talk to Israel about; the plumbing for the autonomy agreed to at Camp David is in place -- only the faucet need be turned on.

Four countries border on Israel: Lebanon, Syria, Jordan and Egypt. The Israeli foreign office likes to talk about 20-plus enemy states populated by 100 million-plus Arabs. The radical Arabs like to meet in Algeria and Morocco, 1,500 and 2,000 miles from Israel, and call themselves "confrontation states." But, if Algeria or Morocco (or Yemen or Iraq or Libya or any of the rest) had serious intentions of playing a major part in the Arab-Israeli dispute, there probably would have been at least some sign to that effect during the last 30 years. So Israel has just four neighbors to contend with.

Let's start in the north. The Lebanese-Israeli situation is moving methodically toward resolution. The bargaining has been long and hard, but, for the Lebanese, the basic consideration is simple. Lebanon would like to have its country back. After eight years of being tugged at by the PLO, Israel, and Syria -- not to speak of the U.N., the French, the Italians, and the Americans -- the Lebanese are sick and tired of running into roadblocks bearing different foreign flags every time they cross the street. The price they will pay -- limited political recognition of Israel, security concessions and open borders to the south -- is very small considering the alternative: the permanent partition of Lebanon.

Lebanon is already doing more business with Israel each month than Israel did with Egypt all last year, and Haifa has become a "Lebanese" free port. The Lebanese are timid regarding their formal relationship with Israel, and that is understandable. But the Lebanese are businessmen, not warriors; ties with Israel are to their advantage. Their people understand that; their politicians are just a bit slower in getting the message.

Once Israel is ready to leave, the Syrians and the remaining PLO forces will go quietly -- or so Secretary Shultz and Philip Habib have assured the Israelis all along. If nothing else, the Syrians don't like the idea of heavy Israeli guns perched high atop the mountains east of Beirut, just 25 miles from Damascus. And, the PLO remains in Lebanon at the pleasure of the Syrians only.

With security arrangements worked out in southern Lebanon, with a healthy trade between the two countries, and with no outstanding territorial disputes between them, the northern Israeli border should be quiet for a long time to come.

The Israeli-Syrian situation is much more straightforward. Israel has annexed the Golan Heights. Syria cannot accept that. But, neither can she do anything about it. The war in Lebanon taught her that. The introduction of Soviet missiles and advisors into Lebanon in recent weeks heightens tensions, but it brings the Syrians no closer to war with Israel. The Syrians understand that only with active Soviet participation can they compete with the Israeli war machine. But for all of their material aid, the Russians have never shown any inclination to die in Syria.

Turning to the East, anyone who has toured Judea and Samaria lately -- whatever his predisposition -- will inevitably come away with the impression that what Washington sees as an alterable "obstacle to peace" is closer to being an unalterable set of facts. The American networks are beginning to report what the local Arabs have known for quite a while: that Israel is not going to the trouble of building small-sized cities with names such as Maaleh Adumim, Ariel, Efrat, Emanuel, Kiryat Arba, and Elkana only to remove them. (Judea and Samaria is not Sinai.) West Bank Palestinians who a year ago were shouting "Palestine at all costs" are now pleading with Arafat to come to some accommodation with Israel before it is too late.

But it is too late. The Arabs had a chance to establish Palestine on the West Bank when it was still the West Bank, between 1948 and 1967. Then, it wasn't enough; now it is no longer possible. The Palestinian Arabs of Judea and Samaria appear to be left with just two choices: they can have the autonomy (over their community lives, but not over the larger territory) agreed to at Camp David or they can be annexed. The latter would be more democratic (as Israeli citizens they would be eligible to vote); the former is more likely -- at least until the demographic future of Israel becomes clearer. The fact that 100,000 Palestinians have left Judea and Samaria over the last 15 years cannot be ignored. If this trend continues, resistence to annexation should diminish within Israel.

Ariel Sharon is viewed in the West (and by many in Israel, too) as a big- mouthed, gun-toting warmonger. But, when the history of Israel is written dispassionately in 25 or 50 years, it will undoubtedly note that between 1981 and 1983 Sharon quietly put into motion a process which guaranteed Jewish control over Judea and Samaria for the foreseeable future. The work was so quiet, so quick, and so efficient that even most Israelis were flabbergasted to learn what had been accomplished whennpress reports first began to appear last fall.

Settlement sites were carefully chosen to surround Arab towns and villages as well as to secure Israel's coastal plain; land titles were painstakingly searched; and sufficient land acquired -- with full attention to Israeli and Jordanian law -- to house 200,000 Jews. Agricultural land for the most part was left in Arab hands, preempting the cry of forced ouster. Roads were built, water pipes and electrical lines laid, building sites readied, and serious-looking cities began to spring up overnight. By the end of 1983, according to some estimates, there will be 50,000 Jews living in Judea and Samaria; and by 1986, 100,000.

Egypt? Whether the Egyptians seriously want peace with Israel is a genuine question. When Defense Minister Moshe Arens voted against Camp David in the Knesset, it was because he didn't trust the Egyptians; it is doubtful that he has changed his mind. The skeptics argue that Sadat wanted his land back so that he could show his people something more than poverty. They say that he was just pragmatic enough to know that he couldn't get Sinai back without going through the motions of peace.

Ironically, if any of Israel's four neighbors could truly benefit from a solid relationship with Israel, it is Egypt. If nothing else, Israel, at the forefront of agricultural technology, could teach Egypt how to feed itself. And, if Egypt must import food, it would seem to be cheaper to bring it in overland from Israel than from some far-away continent. Yet, the representative of Israel's Agricultural Export Cooperative, Agrexco, in Egypt sits in his Cairo office with nothing to do (his daughter told me so) because less than a year after the final Israeli withdrawal from Sinai, the Egyptians have found in Lebanon the excuse that they have been looking for to sever trade with Israel.

Egypt might not like Israel, but it isn't willing to fight Israel anymore either; it suits neither her spirit nor her interests. Psychoanalyzing national wills is a dangerous business, but you get a bit of a hint of Egypt's military intel inevntions toward Israel by taking a look at her attitude toward the Gaza Strip.

It is especially worth recalling how Egyptian control over Gaza was not an issue when the Sinai agreement was signed. True, Gaza was not Egyptian territory, but it was no less Egyptian than the West Bank was Jordanian. After the 1948 and 1956 wards, Egypt was eager to retain control over Gaza. Apparently it was important to her. Why? Because Gaza provided a very convenient staging ground for incursions into Israel. By Camp David, Egypt's considerations had changed: Who needed 500,000 more mouths to look after? If the Gazans wanted a Palestine, let them terrorize Israel from within.

The Israeli-Egyptian border, it appears, will be quiet for a long time to come.

But what about the future of the Gaza Strip? Politicians everywhere like to lump the West Bank and Gaza. But, are they a "lump"? What they have in common is a Palestinian population. But, take a look at the map. In the most perfect of worlds, a poor case can be made for an independent state in Judea and Samaria -- from Hebron in the South to Jenin in the North, from Tulkarem and Kalkilya in the West to the Jordan River in the East. It would be anywhere from 25 to 40 miles wide and 90 miles long. And it would be very landlocked.

The Gaza Strip on the other hand is on the Mediterranean. It has port potential. But it is only five miles wide and 25 miles long. Does that look like a country? So the utopian cry is to federate the two areas. But, there is a major problem here. Gaza is 50 miles from the West Bank. Is Israel expected to provide land for, maintain and secure a 50-mile corridor so that Gaza can link up with an at-best-marginally-viable and certainly hostile Palestine on the West Bank?

If Gaza were to remain under Arab control, Egypt was the only possibility. Egypt did not press for control of Gaza at Camp David. So Gaza will remain a part of Israel. That is its fate. Gaza in fact has become so much a part of the Israeli econony -- providing cheap labor and selling its wares at some of the most reasonable prices in Israel -- that a recent Israeli newspaper article called it, not Beersheba, the real capital of the south of Israel.

And what about King Hussein? He went to war in 1967 when he still held the West Bank. And he knew immediately that he had made the mistake of his life. It seems unlikely, almost inconceivable, that he would risk what is left of his kingdom to unilaterally attack Israel. Theoretically, if Jordan were to align itself with Syria, a respectable front could be opened. But Syria and Jordan have never done anything but scowl at each other. Hussein, the master survivor who had ridden above the waves for more than 30 years and outlasted all other rulers in the area, would most of all like to live out his life in power and in peace. The recently billed "breakdown" in talks between Hussein and Arafat only reinforced the king's fence-straddling image.

If the borders of Israel are set and the fate of Judea, Samaria, and Gaza dedided, what then about the Palestinian problem? The answer, as anyone who cares about these people -- and not about using them -- should be willing to admit, is that, as far as Israel is concerned, there is no Palestinian problem.

As the world defines it would imply the following: dismantle the refugee camps in the Arab countries adjoining Israel as well a those within post-1967 Israel; abolish UNRWA (the United Nations agency dealing with Palestinian refugees, which is a self-perpetuating monster); and relocate any Palestinian Arab who so wishes inside Israel. Without getting into economic particulars, Israel, ultra-sensitive as it is to demographics, would never agree to such a population transfer. Since Israel has the last word, the subject is closed.

What can be done for the Palestinians now is to let them become citizens -- instead of permanent transients -- of the states in which they reside. That doesn't seem such a hard thing to accomplish. In Lebanon alone, there are 250,000 Palestinians -- refugees from the 1948 Israeli war of independenc and from the 1970 Black September expulsion from Jordan. Few of them have Lebanese citizenship; most of them would like it. It would be a good place for Washington to place its energies.

To speculate on the long-term effects of a Greater Israel of the kind envisioned here on the eventual character of the Israeli state is tempting, but unwise. There ar just too many variables.

A local Arab population which finally knows where its future lies might turn its attention to its own material well-being -- even if the system isn't exactly what it would prefer -- rather than to messianic politics. Or a fringe element, funded by outsiders, might make this impossible.

Arabs living in Judea, Samaria and Gaza might continue to emigrate in large numbers, eliminating the threat they pose to the Jewish character of the state. Or, seeing better opportunity in Israel than elsewhere, they might reverse this trend, making Arab-Jewish demographics the issue of the next century.

A slackened internal debate on security and territories might free Israel to unify and build itself economically, or it might make room for heightened friction between prosperous and poorer Jews.

Reduced pressures on the borders might make it possible to divert funds from the military to civilian needs, or the cost of continued vigilance -- with the constant necessity to keep up with changing technology -- might still prove too burdensome.

A U.S. leadership might finally emerge which is ready to accept Israel as it is, but such a leadership might also decide that the time to bankroll Israel has passed.

One thing is clear: the future character of Israel will not depend so much on what happens within Israel as on how quickly the Arabs who surround Israel are willing to accept the new and unalterable reality. But this was also the case in 1948.