The real news in the Mideast is that the Palestine Liberation Organization is being eased out of the picture by Arab states intent on reaching a settlement. What those states appear to have in mind is to establish, if necessary without the PLO, something close to the geographically, politically and militarily constricted "homeland" that is on Jimmy Carter's drafting board.

It's hard to exaggerate the importance of this development. It opens the way to surmounting the immediate tactical hurdle of arranging Palestinian representation at a reconvened Geneva press conference - this is the main purpose of the Secretary of State's imminent Mideast passage. More basically, it makes possible progress on the Palestinian question, the core Arab grievance. Movement here would imply, and produce, movement on the core Israeli grievance: Arab rejection of Israel's legitimacy.

What has happened? By the 1970s the PLO, undisciplined and evidently undisciplinable in both methods and objectives, and gotten out of hand - out of Arab hand. Saudi Arabia, Araby's banker and the last country in the stormy Mideast to want a Palestinian loose cannon on the deck, passed the word. Syria, opertionally the make-or-break country for the Palestinians, did the deed, acting in Lebanon to reduce the PLO to size, destroying it as an independent force.

Carter, by calling for a Palestinian homeland linked to Jordan, in effect asked that the PLO be further reduced. Syria is now doing just that, with Egypt and Jordan, which have (separate) voices but little influence on this issue; Moscow is going along. Syria's President Hafez Assad is smothering what remains of the PLO's semi-independent military capability in Lebanon and staking out negotiating positions in which the PLO is essentially ignored.

Arnaud de Borchgrave's Newsweek interviews with Assad and Jordan's King Hussein convey the PLO's decline.

It is no surprise to see Hussein kissing off the PLO, suggesting that his fellow Arabs erred in 1974 at Rabat by handing it responsibility for the West Bank, and calling for "Palestinians living on the West Bank to decide [their political future] for themselves." He has always perceived the PLO as a threat - politicaly to his West Bank claim, socially to his conservatism. The current atmosphere lets him say so.

Assad's remarks are the surprise. On nothing does he contradict Hussein. He passes by the PLO, stating that the future of the West Bank should be decided by Jordan and "the Palestinian people." Implicitly, he cancels Rabat. The PLO, already cut out of the Military action, is being cut out of the diplomatic action, too.

Israelis have been slow to recognize this development though it proceeds in part from their own refusal - supported again yesterday by President Carter - to deal with an organization formally committed to the Jewish state's destruction. They seem psychologically unprepared to accept what this development says about the rationality of other Arabs. That the West Bank could be run by Palestinians who aren't cutthroats undermines Israel's claim to keep the territory. Most ISraelis still clutch to their bosom the destroy-Israel demands in the PLO's charter and in the PLO's continuing rhetoric.

It becomes progressively less important to heed either the bloodcurdling rhetoric the PLO dispenses in public to keep the faith and to protect itself from its redhots, or the soothing rhetoric it offers privately to sympathetic Westerners eager to hear that the PLO just may be ready to accpet, for the time being anyway, a West Bank - Gaza state.

The fact is that from the tame, reduced, Saudi-ordered, Syria-squeezed, Jordan-linked Palestinian homeland now being contemplated by Arabs and Americans alike, it is not so far as commonly supposed to the semi-autonomous West Bank province envisioned by Begin and by Moshe Dayan. The new Israeli government has suggested that West Bank ties with Jordan be enhanced: little problem here. It demands that Israel's security must be paramount: I see no absolute roadblock to determined diplomats here, either.

The hangup comes chiefly on the issue of West Bank (and Gaza) sovereignty. The Israelis claim they need it for control and security. Americans and, increasingly, Arabs say that Israel's legitimate requirements can be served without it. They're right. The danger of Menachem Begin's religious obsession with the West Bank is precisely that it keeps Israelis from looking objectively at this option. His settlement policy flouts this option, too.

Needless to say, teh PLO won't depart without a fuss, a political fuss that for Arabs will be an ordeal. Some in the PLO will turn to, or stay in, terror but terror is already a fact of Mideast life, anguishing but manageable. On Israel will fall the burden of acknowledging such a great Arab step forward and of taking matching steps toward peace.