AT LAST someone in authority has mentioned that the Palestinian question has something to do with the Persian Gulf war and the permanent crisis in the Middle East.

Pierre Joxe, France's new defense minister, said it is not linked in the way Saddam Hussein tries to link it -- to a pullout from Kuwait -- but is linked by "history and geography" to the situation in the region. No one in Washington breathes a word about it.

At a State Department symposium on oil and the Middle East arranged by the American Foreign Service Association, Richard W. Murphy, former assistant secretary for Near Eastern and South Asia affairs, delicately mentioned that "Americans have been very reticent about political changes in the Arab world."

"We have not advised the oil-rich how to spend their money," he said. "Nor have we talked up democratization."

Since the war broke out, we have kept a submarine silence about its underlying cause, the Arab-Israeli problem. We talk about Palestine as little as the Palestinians talk about the invasion of Kuwait as the precipitating event in the gulf war. The other morning, at a meeting of the Center for Policy Analysis on Palestine, speaker after speaker made it plain that what to the allies is the liberation of Kuwait is to many Arabs the sacking of Iraq.

Center Chairman Hisham Sharabi warned that what the West calls "Islamic fundamentalism" is in fact a political movement, sophisticated and organized and "nourished by anger and dispair, sustained by an absolutist mentality" and centered on the injustice dealt to Palestinians for the last 50 years.

While the argument rages on about the wisdom of starting a ground war, a desultory discussion goes on about the shape of the peace. In this regard, Secretary of State James A. Baker's suggestion of a Middle Eastern bank to finance reconstruction of the region was most discouraging. There is nothing wrong with having a bank, funded by the local sheiks, that might begin to redress the awful imbalance between haves and have nots. But it brings to mind the fatuous proposal of Lyndon Johnson, when he was holding out the promise of another bombing pause, that we would finance a TVA for the Mekong Delta. The problems in Vietnam were not fiscal. Ho Chi Minh was looking for independence, not welfare. The problem in Vietnam was political. So is the gulf problem. Saddam Hussein knows it if we do not.

Baker knows it too. At least he did once. Last September, after the invasion of Kuwait, speaking to the House Foreign Affairs Committee, he remonstrated with Rep. Mel Levine (D-Calif.) about Palestine.

"Make no mistake about it, Mr. Levine," he said, "one of the most telling arguments that Saddam Hussein makes is that he is the champion of the downtrodden Arab, he is the champion of Palestinians who have no place to go, and who are sorely put upon. And that's why I think it's important that we keep our eye as well on . . . moving, if we possibly can, toward some resolution of that problem."

Since then, Baker hasn't opened his mouth on the subject. James Zogby, of the Arab-American Institute, says, "We tied our own hands. We won't talk about it and say the one thing that would change the war and the peace. We should give Israel every possible security guarantee and assure them they will be more secure if they get out of the West Bank and Gaza. We should steal the issue from Saddam Hussein. It's all he's got. He is like Farrakhan, preaching to the deeply alienated, a hero to the hopeless. If we can defend Lithuania and Latvia to the Soviets, we should be able to defend the Palestinians to the Israelis."

But the prevailing issue at the White House is to keep the Israelis out of the war, lest the Arab masses become so inflamed at the sight of Israelis bombing Iraqi Scud launchers that our Arab allies would melt away. The Israelis refuse to consider any solution of the Palestine issue -- other than expulsion and more oppression.

Baker really owes us one. He allowed the enormous defeat of diplomacy in the desert. He has produced bloody stalemates in El Salvador and Cambodia. He is extremely touchy on the subject of our previous policy towards Iraq, a policy of encouragement and indulgence, for which he refuses to take the blame. He acts as if April Glaspie, our ambassador, was making up policy as she went along in her famous pre-invasion interview with Saddam Hussein.

Baker could liberate himself by saying that he was wrong and he is sorry or by saying that as secretary of state, he is responsible for what goes on in the State Department. In a television interview with Connie Chung last week, he kept using the word "she" about Glaspie instead of "we," as in the State Department, when discussing that damning dialogue with Saddam.

But it is not too late for diplomacy in the Middle East. Even now, we can, as Pierre Joxe indicated, address what it is all about.