Best known in

the West for his opposition to the Camp David accords, Israeli Defense Minister Moshe Arens, the hard-liner who is frequently mentioned here as Prime Minister Menachem Begin's most probable successor, today finds himself in a surprising position: Despite his ideological background, he has become the Begin government's "man in the middle" -- powerful, yet under attack from both left and right.

Israeli doves denounce him for continuing the Likud bloc's settlement policy, which is resulting in a de facto annexation of the West Bank, diminishing chances for a negotiated peace involving territorial compromise with Jordan. At the same time, fanatic settlers in the occupied territories accuse Arens of lacking fervor for their cause. "Murderer!" they shouted at him when he appeared last week in Hebron, where an 18- year-old Jewish yeshiva student had been stabbed to death by Arabs.

Many Israelis say that the year Arens spent as Israeli ambassador to Washington before accepting his current post moderated his hard-line views. (Arens also spent much of his early life in the United States.) "Washington had its effect on him," said one Labor Party politician. "He'll express views he might not have expressed formerly." For example, during the war in Lebanon Arens went back to Israel, protested the bombing of Beirut and tried to halt it. Arens even called for a three- month freeze on West Bank settlement, which was what President Reagan asked of the Israelis during his recent unsuccessful attempt to bring Jordan's King Hussein to the negotiating table.

Last week, I drove with Arens out to visit Maale Adumi, a settlement complex on the outskirts of Jerusalem. On the way we discussed a number of topics, including Hebron, where Arens had responded to the Jewish student's murder and the subsequent rioting of Jewish settlers by dismissing Mustafa Natshe, the town's Arab mayor.

"I did it with great hesitation," Arens said. "I said to myself that the overriding consideration must be the attempt to protect human life and to avoid bloodshed. My conclusion was that his continued presence in office with that municipal council (also dismissed) could very well bring about further bloodshed."

Such interventions would seem to undercut the sort of political autonomy the Begin government claims to want for West Bank Arabs. Arens, however, is unbothered by the apparent contradiction. "Until such time as we have an arrangement for autonomy, what we have in Judea and Samaria is military law, and we must do what we consider necessary for protecting life and limb. Once we have an agreement for autonomy, then the entire situation changes. . . . Then there will be elections for a self-governing council and that self-governing council will assume responsibility for a lot of this. But at the present time if I have to choose between doing something distasteful -- and this is distasteful to me -- and doing what I feel is essential to protecting life, I feel I have to do the latter."

What Arens neglects, however, is that the autonomy talks required by the Camp David accords have been suspended, and there is no prospect of their resumption.

I asked Arens whether he saw any way to supplant the sort of hostilities that exploded in Hebron last week with peaceful coexistence between Jews and Arabs on the West Bank. "It's not always that simple," he said. "But I think we can work it out, and I think we have to work it out. There's no way that we're going to arrive at an accommodation in this area and a peaceful coexistence by an arrangement that would be based on racial suppression."

With that in mind we turned to discussing what has become for many here the central political question: If Israel continues to occupy the West Bank and Gaza, will it grant political rights to the 700,000 Palestinian Arabs who live there? Arens replied, "Israel's population must make a choice between a defensible border, which is the Jordan River, but which nevertheless includes an additional large Arab minority, or not having that increment, but living within borders that are not defensible. There's no question about what it ought to be -- defensible borders, even though it means that we may have to face a bigger challenge in creating the kind of pluralistic society so the Arab population of Israel can feel at home even though they are a minority.

"I would say that tendency of trying to build a state where the entire population is pure racially or religiously or nationally has pretty much gone out of fashion in the Western world, and I'm not sure it's something we want to cling to. Building a pluralistic society in this part of the world with Jews and Arabs is not easy, but I think it's something we have to do and can do. I would think that when Israeli sovereignty is extended over Judea and Samaria (the traditional Jewish names for the West Bank), and I think eventually it will be extended -- I certainly favor that -- you have to give the residents the option of becoming Israeli citizens."

While Arens says he believes in eventual political rights for West Bank Arabs, he firmly rejects the Reagan plan's proposal for a negotiated settlement with Jordan involving the West Bank: "I think it's something that is not real in the Middle East. Peace in the Middle East is not peace like it exists between the United States and Canada. In the Middle East, if you're not strong, if the other side feels they have a military advantage, that's the end of any peace treaty. So there's no way of making this kind of trade by giving up territory."

Arens does not believe that the Begin government's rejection of the American position on the settlements issue or the Reagan plan endangers U.S. aid to Israel. "The Americans are getting more value for their money than in any other expenditure in the defense area. The Middle East today is not under Soviet domination because of Israel's presence, because of Israel's military potential in the area. A good part of that potential is due to American assistance. If people in the United States cut military aid to Israel, it would be like cutting their nose to spite their face."

What about the suggestion made by some Israeli Labor Party members that the United States should cut off or put in escrow aid money that enables Israel to build West Bank settlements? Arens said firmly, "Investments that Israel makes in Judea and Samaria are the last investments we would give up under the most stringent economic conditions because we feel that our very physical security depends on what we do in Judea and Samaria. This is protection for the people who live in Jerusalem and Tel Aviv. That's the last thing we would give up."

As to the recent debate over Israeli troop redeployment in Lebanon, Arens said that the Israelis want to have any areas they evacuate taken over by the Lebanese and the multinational forces. Although a final plan coordinated with the Lebanese hasn't yet been drawn up, he said, what Israel desires is "to bring about a fairer sharing of the burden. I think there's a general feeling starting with the Lebanese and maybe shared by some Americans that when it comes to carrying a burden, they prefer somebody else to carry it, and it's easier if the Israeli Defense Forces do it. We don't have to stay in the area of Beirut to take care of the safety of our population in the northern part of Israel."

Lebanese politicians recently told me that Israelis and Lebanese were promised by the Americans that if they found an accord, the Saudis would convince Syria to remove its forces from Lebanon. Arens said that the Americans, in his view, were indeed very "optimistic" during the negotiations and apparently quite convinced that the Syrians would withdraw. "We thought they were unduly optimistic at the time. Unfortunately, our estimate turned out to be correct." Arens downplays the danger of war between Israel and Syria, but warns that "with a dictator like Syrian President Hafez Assad, it's certainly quite possible that one day he'll take it into his head again." As for Israel, "we need war with Syria like a hole in the head."

Speaking of the Palestine Liberation Organization's breakup, Arens said, "I'm not unhappy about it. Any disunity in that camp can only be good for Israel. . . . I would say that the biggest danger facing us is a grand Arab coalition against Israel. So any kind of internecine strife in the Arab world would in effect decrease the probability of the formation of such a grand Arab coalition. That's good for Israel. The infighting within the PLO also reflects divisions within the Arab world. Most of the subunits of the PLO are backed, supported or financed by one or another Arab government. So the infighting reflects enmity and hostility between Arab governments and that's not bad for Israel."

On the prospects for peace, Arens said: "Israel wants to live in peace. We pay the price for not being at peace with our neighbors in the most important and valued currency -- the lives of our sons. We live in a difficult place. The Middle East is an odyssey in brutality and intolerance with little value attached to human life."

Arens lambasted the Egyptians for recalling their ambassador to Israel after the Lebanon invasion, calling it a violation of the Camp David treaty. And he emphasized that Israel still wants a peace treaty with Lebanon and normal relations -- something it has so far failed to get from its relationship with Egypt.

"When you think back two years, no Israeli would have dreamed that we could have sat across the table from a Lebanese and then negotiate with them face to face and gotten an agreement," Arens said. "Israel and Lebanon today are in contact. People are meeting at various levels, and I think there's every chance we'll have a good relationship with Lebanon. That's a step of no less importance than the treaty we signed between Israel and Egypt."

What about a similar treaty with Jordan? Arens snapped, "I think we've all seen that King Hussein is one of the last absolute monarchs left in this world, and he is afraid of taking any chances. I don't think we should have any illusions about Hussein being the great peacemaker."

What about the defense minister's own future? After all, I remarked, a lot of people say you will one day be prime minister. "I'm not one of them," said Arens firmly. "I don't want it, therefore I don't believe it."