FOR THE THREE MONTHS since Egyptian President Anwar Sadat went to Jerusalem, the Palestine Liberation Organization and other Arab "rejectionists" have been assailing him as a traitor to the Palestinian cause. So it is no surprise - only another tragedy - that in a Cyprus hotel lobby on Saturday a couple of Palestinians assassinated an Egyptian editor and confidant of Mr. Sadat's, Youssef el Sebai. The tragedy was, unfortunately, compounded by the misunderstanding that led to a shootout between Cypriot soldiers and Egyptian commandos. The PLO has been careful to kept private lines open to Cairo, and it at once denied a role in the murder - as though its public denunciations had not created the climate in which the assassins acted. Interestingly, the PLO's denial was rejected by the crowd that gathered in Cairo for the slain editor's funeral. "No more Palestine," the crowd shouted, "Arafat, Arafat, round up your dogs."
In fact, the PLO is still infected by an ambivalent attitude toward terror. When the victim is a Youssef el Sebai, representing a country the PLO dares not entirely alienate, the act is disclaimed. But twice last week, people were killed in Israel by time bomb explosions for which the PLO proudly claimed credit. And PLO spokesmen have also accepted responsiblity for a number of recent assassinations of Palestinian "moderates" in the Israeli-occupied West Bank.
So primed with hatred and radicalism is the Palestinian fringe that, no doubt, episodes of terrorism would probably continue even if the PLO's formal goal of rendering Israel "null and void" were met. Dealing with this fringe presents a continuing operational problem. But a more troublesome political problem lies with the mainstream, which still cannot bring itself, as Egypt has, to substitute negotiation for violence. Mr. Sadat declared, after the Cyprus shooting, that such an incident will not slow his quest for peace. But the Palestinians - the mainstream - have not visibly begun theirs.
Israeli Prime Minister Menahem Begin expressed condolences for the death of Mr. Sebai. (Is it not now possible, even necessary, for Mr. Sadat to start expressing similar condolences for Israel victims of Palestinian terror?) Mr. Begin went on to say, however, "There are still people who believe a state can be established to be ruled by the perpetrators of acts such as we have witnessed in Cyprus today." The remark was an unworthy effort to make a debating point out of a misfortune that has nothing directly to do with the real issues lying between Egypt and Israel.
Mr. Sadat, and other Arab moderates, after all, are not proposing to set up a Palestinian state ruled by terrorists. They realize that such a state, by its proclivity for violence and radicalism, could thrust the whole region into new crisis. What they want is a limited and leashed Palestinian homeland, one with a stake in stability and growth rather than irredentism. It is precisely for seeking that sort of Palestine that Mr. Sadat has been attacked by Arab "rejectionists" and that Mr. Sebai was murdered. His assassination offered a perfect occasion for Mr. Begin to recognize as much. Instead, he played to old frozen Israeli fears.