ONCE AGAIN two European governments have fallen into a public quarrel over extradition of terrorists. Once again, the only beneficiaries are the terrorists themselves. This time it's the West Germans and the Yugoslavs.

West German police had tracked to Zagreb four suspects in a series of terrorist murders. The Yugoslavs promptly jailed the four. But at the same time the Germans were holding a Croatian nationalist whom the Yugoslavs wanted in connection with a long list of crimes, including the murder of a Yugoslav diplomat two years ago. Germany refused to extradite the Croat. Tit for tat, Yugoslavia freed the four German suspects; they promptly fied, apparently to Algeria, that ready haven for any gunman or bomber who claims a political motive.

It's difficult not to feel a measure of sympathy for the Yugoslavs. For half a century they have been harassed by the Ustashi, a bloody-minded and obsessively nationalistic Croatian brotherhood. A certain historical interest attaches to the Ustashi, as a survival of pre-World War II fascism that continues to exist and operate in Europe. Their stated purpose is the destruction of Yugoslavia. They claimed responsibility for bombing a Yugoslav airliner in 1972 killing 29 people. They have shot several Yugoslav diplomats over the past decade, and in 1975 attempted to assassinate President Tito with a time bomb. Last year three of them shot up the Yugoslav mission to the United Nations.

The suspect held by the Bonn government is one Stjepan Bilandzic, who, Belgrade claims, is the central figure in a great variety of recent terrorist activities. But the Yugoslavs' attempts to have Bilandzic extradited became a national cause among Germany's large population of expatriate Croats. Some of the Croation gunmen living in Germany threatened to turn their attentions to German policemen and courts if Bilandzic were delivered to Belgrade. The German courts examined the Yugoslas' evidence against Bilandzic, found it persuasive but, hem-hem, unfortunately certin technical considerations required . . . etc., etc. Germany refused to extradite him. That's the point at which the Yugoslavs freed the four Germans.

Two years ago it was Germany that wanted a suspected terrorist - the Palestinian known as Abu Daoud - and it was the French who held him. The French hastily found a technicality on which to free him before the formal extradition papers arrived. They feared that extraditing him would damage their relations with the Arab world.

At one level, these cases are failures of international law and, at another level, of failures of political will.The reasons of state that governments evoke when they do not want to get involved serve the terrorists all too well. All of which brings to mind the familiar excuse of the reluctant witnesses to a mugging: They don't want to get involved.