The editorial ''Why Not Talk Peace?'' {May 23} addresses the right issue, but to the wrong party. It should not be just addressed to Israel, but rather to Jordan, Syria, Lebanon, Iraq, Saudi Arabia and all the other Arab states that consider themselves in a state of war with Israel and have vowed to eliminate the Jewish state and its people.

This determination has not been changed by the fig leaf of Yasser Arafat's orchestrated ''renunciation'' of terrorism in December of 1988. In fact, just five days after his supposed recognition of Israel and renunciation of terror, Mr. Arafat had these words to say: ''I did not mean to renounce'' terrorism, but on the contrary, ''the armed struggle has not ended.'' Or, for a more recent and explicit program, one has only to recall Saddam Hussein's bloody boast last month that he would scorch half of Israel with poison gas.

Unless the Arabs indicate at least a willingness to talk peace -- following the example of Egypt -- how can any government of Israel consider concessions that jeopardize the physical security of its population? How could any government take such risks?

The Post failed to even mention that last year, Prime Minister Yitzhak Shamir offered a peace plan, which was endorsed and supported by the U.S. government. As a first step, it would allow the Palestinian Arabs in the territories to choose their own representatives from among themselves, in free and democratic elections (their very first) in order to then negotiate their future status with Israel.

Naturally, the Tunis-based PLO bureaucratic apparatus does not want to be replaced by local leaders, and has vigorously opposed the Shamir plan, using intimidation and assassination to enforce its will. Naturally, also, Israelis are reluctant to negotiate with an organization that is still linked inextricably with numerous terror attempts and incidents since Arafat's famous words, and whose charter still calls for the elimination of Israel.

The U.S. government professes the same principle of not negotiating with those whom it regards as terrorists -- even though its security is not at stake. Does this mean that the United States is also ''obstinate'' and ''intransigent''? Or are we just being ''principled''? Isn't this what the Iran-contra affair was all about?