The Israeli Cabinet condemned the European Common Market declaration on the Middle East conflict today, likening it to the 1938 surrender of the Sudetenland at Munich.

The cabinet ministers also debated a proposal on whether Israel would receive a Common Market fact-finding mission to the Middle East. According to Cabinet sources, the proposal was the Europeans to send a delegation here.

In unusually strong language, Prime Minister Menachem Begin said that the declaration adopted by Western European leaders in Venice Friday "calls upon us and all other nations involved in the peace process to involve the Arab SS, called the Palestine Liberation Organization." He was referring to the Nazi storm troopers of the World War II era who supervised the concentration camps.

"[In Beirut, the PLO issued a harsh attack on the European declaration, criticizing it for not clearly favoring an independent Palestinian state and for failing to recognize the PLO as the only legitimate representative of the Palestinian people. Details on A24.]

Begin noted that Fatah, the main arm of the PLO, declared at its recent annual meeting in Damascus that it intended to "liquidate the Zionist entity politically, economically, militarily, culturally and ideologically."

Yet despite this covenant, Begin declared, "a number of European countries are prepared to give guarantees, even military ones," to assure peaceful coexistence.

After the Cabinet meeting, the prime minister told reporters, "Anyone with a memory must shudder, knowing the results of that guarantee given to Czechoslovakia in 1938 after Sudetenland was stolen from it."

Referring to the Fatah resolution, Begin said, "Since 'Mein Kampf' was written, no words were ever more explicit for all the world to hear -- Europe included -- on the striving to destroy the Jewish state and nation."

In their declartion, the European leaders asserted that the PLO would have to be associated with the Middle East peace negotiations, although they stressed they were not recognizing the organization.

They also made clear that certain principles would have to apply to all parties particiating in peace talks. These principles include Israel's right to exist and the Palestinians right to self-determination.

Sources said that Begin wanted the Cabinet to specifically criticize France and West Germany as liabilities to Middle East peace, but that Foreign Minster Yitzhak Shamir talked Begin out of the stronger language.

Sources said that some in the Cabinet opposed allowing a Common Market fact-finding mission to visit Israel on grounds that it would come here with preconceptions. Opposition to the mission was reportedly led by Agriculture Minister Ariel Sharon.

Last year, the government refused to allow a United Nations group to visit Israel to study settlements in the occupied West Bank and Gaza Strip, saying the mission had been established by the U.N. Palestine Committee and was dominated by unfriendly Arab nations. The settlements committee visited Jordan and issued a report that led to the U.N. Security Council condemnation of Israeli civilian settlements in the occupied territories.