When and if Egypt and Israel consummate their separate peace agreement, it could well be the beginning of the end for the Palestine Liberation Organization - not through overnight collapse, but impending disintegration.

That is not necessarily bad news for the Palestinian people, for if the Camp David agreements work out as planned, the lot of the Arabs on the West Bank and the Gaza Strip ought to improve regardless of what happens to the fatally split PLO.

The rival leaders of the terrorist movement are, for the moment, united in denouncing President Carter, condemning Egypt's President Anwar Sadat as a traitor and threatening Israel's Prime Minister Menachem Begin with more violence, but it mostly adds up to whistling in the dark.

In Beirut, officials of the PLO are saying, "it's true that there can be no war without Egypt, but there can be no peace without the PLO." That threat is based on the dubious proposition that all the Arab nations hostile to the Camp David agreements will continue to back the PLO indefinitely with money, arms and staging areas for terrorist operations.

The cold fact is that key Arab countries are already fed up with the PLO, whose activities have caused havoc and dissension is nearly every country where the guerrillas have been harbored.

They provoked a civil war in Jordan, which led to their explusion by King Hussein in 1970. Their efforts to dominate Lebanon did much to make a corpse of that poor country. Their erst while protector, Syria, finally had to send an army to Lebanon to subdue the PLO forces. In Iraq, a rival Palestine liberation movement has taken root.

Sadat, the PLO's old friend and supporter, was saying even before Camp David, "Egypt has been defending the Palestinian cause everywhere, while the Palestinians go to the night clubs and hire themselves out as assassins and terrorists."

Sadat put his finger on the inherent weakness of the PLO, which is that its backers look upon the guerrillas primarily as hired hands who are useful only so long as they remain an effective instrument against Israel, a role made much more difficult by the Israeli-Egyptian settlement.

Over two years ago, David Pryce Jones, an experienced Mideast observer, said the PLO "is not, never has been, and never will be, a national liberation movement of the kind to which the world has become accustomed since 1945."

The PLO, he noted, "did not come into being as a spontaneous expression of national hopes to retrieve what had been forfeit at the end of the British Mandate." The late Gamal Nasser, he added, "manufactured the PLO in 1965 as a tool in the service of Egypt for the inter-Arab struggle, and it has remained a creature of decree ever since."

It was not the fragmented Palestinian people who proclaimed the PLO as their "sole legitimate representative." That arbitary coronation was the result of an Arab summit conference at Rabat in 1974. Before that, King Hussein had been seen in that role.

A few days ago, there was another summit meeting of the "rejectionist" Arab nations at Damascus to plot ways of opposing the Camp David peace plans and keep the PLO going. The divergent aims of the participants, however, led to little or no action, other than breaking relations with Egypt. The question of financing future PLO operations was conspicuously unresolved.

The tears of the Arab hardliners for the Palestinian people now, as before, are of the crocodile variety. They still insist that their paramount objective is an independent Palestine state, but they can't seem to explain why they didn't create one when they occupied the West Bank between 1948 and the 1967 war.

Both Sadat and Begin appear to be more concerned with the Palestinian people, as distint from the PLO, than their Arab critics. The peace agreement, says the Egyptian leader, "will remove the suffering of the Palestinians now under occuption." Speaking of those in refugee camps, he said, "for 10 years no one heeded the suffering, no Arab leaders visited them." Begin, in turn says, "Let us leave the question of sovereignty open - undecided - and let us deal with the human beings."

Over the years, it has cost more than a billion dollars to support the displaced Palestinians. The U.S. contribution up to 1975 was $619 million (about 60 percent) as against $42.2 million for all the Arabs, or less than 5 percent.

Once the West Bank-Gaza Palestinians achieve autonomy under the Camp David plan, who can say what they eventually will opt for? Currently, most of the mayors of the region are regarded as pro-PLO, but it is hard to say whether that is chiefly out of conviction or fear of PLO terrorists. It is safe to conclude, however, that the decline of the PLO will significantly alter the Palestinian political climate.