SADDAM HUSSEIN has put forth a preposterous but revealing proposal. The preposterous part is to condition unspecified new ''arrangements'' for Kuwait on Israel's ''immediate and unconditional'' withdrawal from occupied Arab territories, Syria's withdrawal from Lebanon and ''withdrawal between Iraq and Iran.'' It's not only that these are three very different projects so vexing as to ensure the indefinite distraction of those opposing Iraq's aggression. The hint that Kuwaiti sovereignty may be negotiable cuts across Iraq's claim that in invading it was righting a historic wrong. Anyway, President Hussein's deceptions have laden him with a huge burden of establishing any diplomatic credibility at all. President Bush had no choice but to dismiss his proposal.

The proposal is, nonetheless, revealing. Saddam Hussein, who hoped for acceptance of his conquest by a stunned world order, instead sees growing resistance to it by Arabs, Americans, Soviets, Europeans, Japanese -- almost everybody. Not that the swaggering dictator will easily buckle. But it is because a broad coalition is rallying against his military initiative that he launches a diplomatic one. At its core lies a transparent effort to evoke Arab passion against Israel to fray that coalition. He may also feel that the appeal of a general Middle East settlement extends well beyond the Arab world.

In this way has Iraq tried to involve Israel directly in a crisis in which the Israelis themselves have so far been notably quiet. Israelis had hoped to let Iraq hang itself in general opinion, divide the Arab world, and relieve pressure on them to conciliate Palestinian nationalism. By hanging back, Israel could avoid giving substance to Iraq's wild allegation that the coalition taking shape against it had not only an "imperialist" aspect but also a "Zionist" one. Drawn into the crisis by Saddam Hussein's expedient diplomacy, however, Israel would become a player on its own.

Current American policy seeks no Israeli partner -- certainly not an explicit one. But there is a sense in which the Israelis, even from a discreet stance on the sidelines, are an implicit enforcer. For the Israelis have the capacity, and it is not hard to imagine them preempting any imminent Iraqi desperation attack. If Saddam Hussein has not entirely surrendered the interests of Iraq to personal obsession, he has got to be thinking about the deepening risks to which he is exposing his country.