The tough Arab nationalist leadership of Iraq has launched an extraordinary literacy campaign that makes refusal to learn reading, writing and arithmetic a crime punishable by fines and jail terms.

The unusual measures are said by Iraqi officials to be the first of their kind anywhere. They reflect the authoritarian ways of President Saddam Hussein's government and its determination to rid Iraq of traditional illiteracy, judged out of place amid the economic and social change being hastened here by oil revenues estimated at more than $14 billion this year.

The campaign also fits into Hussein's ambition to end Irag's long standing place as the Arab world's odd man out and restore Baghdad under his presidency to its ancient role as a major center of Arab culture and political leadership.

According to official estimates, the all-out push using Army vehicles, local party and government administration, strong-arm persuasion and even camel-back itinerant teachers in the desert -- seems to be working.More than 2 million Iragis are said to be studying in 28,725 literacy schools manned by more than 75,000 teachers.

Khalid Shukri Shawkat, undersecretary for literacy affairs in the Education Ministry, said in an interview that when the current 14-month cycle of classes ends next summer, about 96 percent of Iraq's illiterates between the ages of 15 and 45 will have learned basic reading, writing and computing.

Some independent observers here question the quality of such high-pressure learning, mostly by rote, in a countryside where livestock and the Arab tradition of oral communication have always played a larger role than books and schoolrooms.

Others raise doubts about the sincerity of many pupils. Some attend only to escape the fines and prison terms, the critics say. One cook was heard grumbling recently about compulsory evening lessons because they forced him to give up an opportunity to open a restaurant in partnership with a friend.

In addition, the literacy lessons are laced liberally with the ruling Baath Party's ideology. In a pamphlet describing the campaign, Shawkat wrote:

"The Ministry of Education was keen to prepare curricula in a way that ensures disseminating national education and appropriate information on the Arab homeland, especially on its leaders, geography and history. It also concentrated on the Zionist settlement occupation in Palestine as an existing danger threatening the masses' future. The ministry also aimed at educating the citizen with a unionist and socialist education."

There is no doubt, however, the observers say, that the program has brought reading and writing to countless Iraqi men and women who otherwise would never have taken the trouble to learn. In recognition of this, the United Nations Educational. Scientific and Cultural Organization earlier this month awarded Iraq its annual prize for the most effective literacy campaign in the world.

For Shawkat, the prize crowned an effort begun when the Iraqu Revolutionary Command Council issued "law number 92 for a national comprehensive compulsory literacy campaign" on May 22, 1978. The law made going to school a legal obligation for every illiterate between ages 15 and 45 and set up a Supreme Council to organize the campaign.

It provided for fines of $30 or jail terms of a week for any Iraqi illiterate who refused to attend classes. Any Iraqi who claimed he could read and was found to be illiterate could be fined $90 and jailed for a month. And any Iraqi who attempted to "impede implementation of the literacy campaign" was made liable for a fine of $300 and a jail term of two months.

Perhaps more important, the law appointed as members of the Supreme Council representatives of the ruling Arab Baath Socialist Party, the Army and the internal security police. In the Iraq of Saddam Hussein, that meant the pervasive state and party apparatus was to become part of the campaign.

The government estimates it is spending nearly $200 million on the 35 month program, which officially began Dec. 1, 1978, with celebrations to which the diplomatic corps were invited for inaugural speeches.

Since then, Shawkat's administration has formed "the Pioneers," a corps of volunteer teachers who wear bedouin headgear and robes and ride camels along with their students from camp to camp. Other teachers in southern Iraq, where the Tigris and Euphrates rivers flow into the Persian Gulf, have been assigned to ship out with sailors to continue classes during sea trips.

Taped lessons are handed out to truck drivers and fishermen in the swamps so they can continue studying while they work and can pass the compulsory examination. The Iraqi state television, which blankets the entire territory, broadcasts literacy lessons every night except Friday, the Moslem day of rest.

Most classes, however, take place in local schools and mosques in the late afternoon, after the children have gone home and most men have finished work. Shawkat reported complaints from cafe owners because the classes have cut into coffeehouse gossip sessions, the traditional way rural Iraqis end the day.