ISRAEL is of a mind these days to react severely to the Palestinians who have been throwing rocks and some explosive devices at Israeli forces and conducting other forms of protest. In the demonstrations so far, more than 20 Palestinians have been killed. The United Nations' resolution criticizing Israeli conduct in the occupied territories is just as likely to confirm this inclination. The advice from the United States to use less lethal means of policing disorder will be taken by some Israelis as unhelpful or worse. As happens in these cycles, explanations are being offered by Israel's spokesmen and advocates of how troublesome the Palestinians are, how disagreeable, but how necessary it is to have to police them, how they bring their misery and desperation upon themselves and how, in particular, their fellow Arabs' disinclination to negotiate a sensible resolution with Israel or to do anything much but incite them is at the root of the matter.

There is some truth in all of this, but the real question is not whether Israel's friends will cease to protest that country's action and explanations: the answer to that question is that, despite the current criticism of Israel, there is much sympathy for its difficulties. The real question is whether Israelis will continue to put up with a situation that entails a protracted occupation of a hostile territory and can all too easily degenerate into what has occurred in recent days. If one thing is clear from the past two weeks -- and of course it has all been there to be seen clearly for years -- it is that the situation will go on as long as Israelis permit it to go on. The violence conducted by Arabs in the West Bank and Gaza and by Israel's own Arab population is not simply the result of a button pushed somewhere by the Palestine Liberation Organization, but the result of a 20-year occupation that seems ''gray and endless,'' as the State Department's Middle East man put it the other day.

In the last few years it has been widely noted that the United States has absented itself from the diplomatic trenches of the Arab-Israeli dispute, preferring to focus its regional engagement on the Persian Gulf, where the crisis is currently rawer and the stakes apparently higher. This is true, and it is one of the major diplomatic failings of the Reagan administration.

The first responsibility for its Palestinian predicament, however, remains Israel's. It has seemingly accustomed itself to a form of two-party government in which the party favoring in theory an exchange of territory for peace is, on this great issue, subordinate to the party practicing creeping annexation. At worst Israelis resist change and at best they sit around hoping others will precipitate change. At the propitious moment when Arabs, distracted by the Gulf, have all but abandoned active support for the Palestinians, Israel cannot muster the initiatives that alone might stir and sustain a serious reciprocal Palestinian interest in a settlement.