On the edge of the war-devastated city known by the Iranians as Khorramshahr and the Iraqis as Muhammarah, Arabs seeking independence from Iran have set up under the umbrella of the Iraqi Army a "liberated" village whose future, like that of their cause, remains a hostage to the war.

About 25,000 Arabs, previously inhabitants of a half-dozen cities in Iran's Khuzestan Province, have come to live here in "Baath Village" under the authority of the Arabistan Liberation Front, one of several shadowy groups fighting the central Tehran government for local autonomy or full independence.

With official Iraqi policy shifting toward increasingly open support for the Iranian minorities and dismemberment of Iran, the front would seem to be destined to play a major role in Iraqi designs in the coming months. But talks with a front official and local Iraqi Army officers left unclear the real intentions of the front or the Iraqi government for Iran's oil heartland, about a third of which is occupied by Iraqi forces.

"As a citizen," said Abu Sharif, the village's 23-year-old front official responsible for its literacy campaign, "I want to be united with the Arab nation. . . . We won't get our home rule with the Iranians, so we prefer to fight with the Iraqi Army."

Nervous and evasive throughout the interview, Abu Sharif asked to be called only by his war pseudonym. He refused to clarify whether his goals are the policy of his organization or whether he meant Iraq when referring to the "Arab nation," to the visible irritation of the Iraqi officers accompanying two Western reporters to the village in early April.

The name of the village, which means "renaissance" in Arabic, is also the name of the Iraq's ruling Arab Baath Socialist Party.

The Iraqi officers themselves seemed to know little about the front and spoke as if government policy was still only to told onto Iranian territory inside "Arabistan" until Iran recognized Iraqi sovereignty over the nearby Shatt-al-Arab waterway, the crux of the dispute between the two countries.

In fact, the politics of the various Arabistan liberation groups seems fractious and murky, with the Iraq government keeping something of a veil over the whole movement until its own plans for the province are fixed.

In the meantime, it is allowing the Arabs of Khuzestan to help administer the civilian population in Iraqi-held territory. Baath Village boasts seven primary school, three "supermarkets," a collective farm and various organizations for children, youth and women, all run by the Liberation Front, according to Abu Sharif.

He described the village as being governed by his front "in coordination with the Iraqi government."

Late last December, Iraqi authorities held a press conference in Baghdad, where they presented two representatives of an organization called the Arab Popular Movement in Arabistan. The two, who refused to give their names or ranks, said the movement was fighting for autonomy "even if only within the framework of a democratic Iranian state" and contral of "all the oil wells [that] are within the Arabistan area and belong to the people of Arabistan, according to news agency accounts.

The Popular Movement and the Liberation Front are not the only groups active in Arabistan politics. There is also the Arab Front for the Liberation of Ahwaz, a new group fighting for liberation of the province from Iranian control. Ahwaz is the provincial captial of Khuzestan.

The relationship among all these and several other Arab political groupings remains something of a mystery that even a government escort could not readily clarify. But a government booklet on Arabistan makes clear there have been at least half a dozen movements over the past 25 years, with different names and objective including one championing "Arabistan as part of Iraq."

Abu Sharif claimed his group was founded as early as 1947 as an underground organization initially fighting for self-determination. He said he joined it three years ago, at the onset of Ayatollah Ruhollah Khomeini's Islamic revolution in Iran.

The revolution set loose dormant nationalist movements among Iran's Arabs and Kurds that have plagued the central government ever since and grown steadily stronger with aid and encouragement from Iraq's occupying forces.

Iraq has also trained and armed guerrillas for several of the Arab groups, including the Liberation Front and the Arab Front, whose members are serving as behind-the-line commandos for the Iraqi Army. The state-run Iraqi News Agency and radio periodically run reports of their activities.

There are several major problems facing the Iraqi government in deciding on its ultimate objective in Iran's Khuzestan. One is the fact that only a minority of its Arab inhabitants is actually living in Iraqi-occupied territory.

Abu Sharif said that aobut 500,000 of an estimated prewar Arab population of 3.5 million are in "liberated areas." Asked why so few Arabs had come over to the Iraqi side, he replied: "The Arabs were forced to go with the Persians. If they try to come here, they are shot at or forced to come to Tehran by threats."

He said it was especially youth coming over to the Iraqi side, and that he himself, a resident of Abadan, came eight months ago at the onset of the war.

Other reports from Iran have indicated that the Arabs of Khuzestan have hestitated in going over to the Iraqi side because of the difficulties this would create for them later if the province remains part of Iran.

Another problem facing the Iraqi leadership, particularly should it opt for a policy of annexation, is that the Arabs of Khuzestan are predominantly Shiite Moslem, like Iranians, susceptible to the anit-Iraqi appeals of Khomeini's Islamic revolution.

Already, the Shiites in Iraq, who make up more than half the Moslem population, have at times caused considerable trouble for the Sunni-dominated government. Thus, it would seem to have little interest in seeing the size of the Shiite population in Iraq grow any larger.

A third difficulty facing the Iraqis in deciding what to do here is the effect of any attempt to set up an independent Arab government in prolonging hostilities with the Iranian government. While an Arab-run Arabistan might provide a buffer for Iraq, there is little likelihood Iran would ever submit to the loss of its oilfields, nearly all of which are here.

These problems and dilemmas perhaps explain why Iraqi policy toward the Arabs of Khuzestan, despite calls from Baghdad to revolt and promises of aid to do so, remains ambiguous and even murky.