"NORMALIZATION" between Israel and Egypt proceeds on schedule. The other day Israel withdrew from another big slice of the Sinai desert and the two countries formally opened diplomatic relations. It is amazing. But it is fragile. Though Camp David's target date for setting up Palestinian self-rule in the West Bank and Gaza is only a few months away, Israel and Egypt have made not real progress on the issue and have failed to draw any Palestinians into their talks. It has long been plain that stalemate on autonomy would threaten the stability if not the very survival of Egyptian-Israeli peace. To the specter there has recently been added a second hazard: the Islamic states whose help Washington seeks in countering Soviet expansion are bargaining their cooperaton for American exertions to force Israel to recognize a Palestinian state.

This is unpleasant business, and the United States should have no truck with it. If Arab states that are threatened wish to withhold their cooperation, that is their privilege. This country can hardly be more exercised about their security than they are. The United States' commitments to Israel are not negotiable. But when that has been said to the Arabs, there is something to add to the Israelis. Not every sign of Amerian impatience in making the autonomy talks succeed is evidence of yielding ot extortion. It was Israel that accepted the May target date, understanding perfectly Anwar Sadat's need to show results to his fellow Arabs. It was Israel that, while writing into Camp David a stingy definition ("administrative council") of self-rule, nonetheless also agreed to grant an undefined "full autonomy" and to resolve the Palestinian problem "in allits aspects" -- phases President Carter underlined last week. It is Israel that, ultimately, needs a Palestinian settlement more than anyone-except the Palestinians.

The issue is not whether the United States should push for a Palestinian settlement but how. The course urged by the Arabs and their more singleminded supporters is simply to squeeze concessions out of Israel. But such an effort would only solidify much of Israeli opinion around Menachem Begin, who is about as anit-Palestinian as Israelis come. The better course is to go beyond pressing Israel alone and to work, through the other Arabs, to bring mainstream Palestinians to explicit acceptance of Israel. That would strengthen the hand of the many Israelis who wish to fine ways of coexistence with the Palestinians, and would help melt their legitimate refusal to deal with people who demand to undo their state. This may or may not be the year for an Israeli-Palestinian breakthrough. But what chance there is lies in meeting the legitimate demands of both sides. b