TWO MONTHS AGO the Israeli cabinet authorized new settlement activity in the once-Jewish heart of the now-Arab city of Hebron in the occupied West Bank. Abstentions kept the vote from representing a cabinet majority. Polls immediately showed popular majorities against it. Israel's friends everywhere recoiled. But Prime Minister Begin, not one for prudent dithering, moved ahead. The results were at once evident. Local Palestinian opinion was inflamed and Jewish settler opinion was inflamed in turn. On May 1, a young Palestinian was killed while, it was reported, assaulting the Israeli military government with a knife. On May 2, Palestinian terrorists laid an ambush in Hebron, killing six Israelis. Israel promptly expelled three West Bank leaders and otherwise cracked down.

It is terrible, but who is surprised? Mr. Begin's policy, faithfully reflecting his principles and his constituency, is plain: to hold the West Bank open for settlement now and annexation later. The collective wall of West Bank Palestinians is no less plain: to live their own lives in their own home. From occupation to protest, from settlement to resistance, from repression to terror: the pattern is set. It is war on the West Bank. talks on establishing West Bank autonomy were going to "marathon" session to reach the agreed target date of May 26. It was immediately suggested that the murders had been planned to derail those already lagging talks -- who doubts it? -- and Egypt has now suspended them. Most Palestinians seem convinced that the Camp David process is a charade to mask creeping Israeli annexation. What proves this to them -- and to many others -- is Mr. Begin's settlement policy.

Mr Begin's policy has created a situation in which anxious observers everywhere think first of demanding that Israel accept a Palestinian state, and in which they scarcely get around at all to asking Palestinians to accept a Jewish state. Jimmy Carter is under pressure from Arabs, allies, oil companies and others to follow this policy. Its imbalance makes it necessary for him to resist, and he is resisting. Preoccupied by Iran, his reelection campaign and much else, he may feel that pressure on one side alone wouldn't work. His strategy is to let Mr. Begin show what he can produce in the autonomy talks. He also means to avoid any confrontation that would get in the way of the more promising prospect, the Israeli electorate's choice of new leadership.