For both the Arabs and the Israelis, the battle over President Carter's Middle East arms package has taken on a psychological and political significance that may far outweigh the military considerations involved in the proposed sale of aircraft to Israel, Egypt and Saudi Arabia.

The controversy over the arms proposal is already poisoning the atmosphere between the United States on the one hand and both the Israelis and the Arabs on the other, and is hindering the efforts to resume peace negotiations.

Thus the various compromises that have been proposed - the sale of additional planes to Israel, the suggested restrictions on the Saudis as to how their planes will be armed and where they will be based - are all secondary to the symbolic significance that will accrue to the outcome of the coming congressional debate.

The most controversial part of the deal is, of course, the proposed sale of 60 F15s, the most sophisticated interceptors in the world, to Saudi Arabia, and the linkage to the sale of sophisticated aircraft to Israel.

The Saudis, for all their obfuscation ,have made it very clear that the F15s have become a symbol of American goodwill and test of strength of American-Arabian cooperation in such matters as money and oil. If the deal is voted down the Saudis may not get up and walk out of America's tent the future of the alliance will be strained. Other moderate Arab states, especially Egypt and Jordan, are looking towards the outcome with similar thoughts.

As for the Israelis, although they have stressed all the military dangers inherent to them in the Saudi deal, the real issue is the future of Israel's relations with the United States and the exclusivity of that relationship when it comes to sophisticated weapons.

For all the talk about the Saudi F15s being able to cover Israel's airspace, nobody here doubts the superiority of the Israeli air force in the foreseeable future. Nor is there serious doubt that, given Saudi wealth, the Saudis will eventually get sophisticated weapons no matter what the American Congress decides to do about the administration's proposed package.

The real Israeli objection is two-fold. One has been described as the sibling rivalry factor. Israel has long been an only child when it came to the flow of American weapons to the Middle East and, although the need to give out some goodies to the Arabs is recognized - especially in the wake of Soviet withdrawal from Egypt - Israel does not want that support linked to support for Israel. The perservation of the special relationship is more important than the F15s.

The second Israeli objection, which also transcends this particular arms package, is that Israel wants to keep exclusive rights to the best of American military technology and wants to squash the principle that Arab neighbors should be included as well. In Israel's view, American technology is infinitely superior even to the best of the Soviet equipment and Israel does not want to share it. Israelis believe they need a clear technological superiority if they are to maintain a credible defense with only 3 million people.

Israelis also fear that America is being blackmailed by the Saudis and that they will give in just as so many companies have given in to the Arab boycott. Israel would like the United States to call Saudi Arabia's bluff.

Where Israel may have miscalculated - and there are Israeli officials who are worried about this - is that they thought it would be comparatively easy to marshal enough support in the American Congress to squash the deal. This may not prove to be the case. But some fear a no win situation. If Israel loses this fight in Congress, after having put so much on the line, a great deal of face will be lost perhaps to the encouragement of Arab intransigence. If the arms deal is blocked, the bad will created with the American administration will equally trouble the international waters.

The conventional wisdom in Israel is that, although the Americans may view the Saudis as moderates because they are anti-Communist and cooperative on oil and money matters, they are perhaps the most anti-Jewish of the states near Israel's borders. Therefore the Israelis tend to see Saudi Machiavellis behind every failure to make progress with the Egyptians or the Jordanians.

Israel, however, may be overlooking a long run community of interest with the Saudis, similar to that between Israel and Iran, whereby it is in the interest of both countries to counterbalance Soviet penetration into the region and to guard against the more extremist Arab states such as Iraq not to mention the more extremist elements of the Palestinians, which the Saudis and the Israelis equally fear and dislike.

No one is suggesting that such a community of interest could be formalized but the potential could be recognized - especially since the effort to hinder Saudi-American cooperation seems destined to fail in the long run.