THE CEASE-FIRE of July 25 between Israel and -- through intermediaries -- the PLO was a reaction to a conflict that seemed to be spiraling out of control. But in its effect it could conceivably become something else: the basis for a longer interlude in which new political variations might be tried. The key to any broader possiblity is, of course, that the cease-fire works. The key is that the PLO's forces observe the cease-fire, since the Israelis do not fire across their borders unless they are fired upon either across or within them.

How is the PLO doing? The leadership of this house of many rooms, sensing perhaps that an important international test of its capacities is being conducted, appears to be making an earnest effort to bring its more wayward factions under control. This is essential if the PLO expects to be taken seriously as a political factor. It must show discipline and it must show responsibility. This means an end to terror. There have been, nonetheless, some terrible lapses. Specifically, after Palestinian guerrillas shot up a public bus in (pre-1967) Israel last Wednesday, wounding four people, the PLO's chief of operations in Beirut said that operations inside the "occupied territories" were not covered by the cease-fire. It is contemptible, in the first place, that PLO guerrillas shoot so routinely at civilin targets. The Israelis at least can say, as in the recent Beirut raid, which itself followed massive PLO shelling of Israeli towns, that their targets -- though embedded in civilian neighborhoods -- were military. It is, moreover, a sham for the PLO to claim the cease-fire does not cover actions in the "occupied territores." Not only does that formulation call into question that very existence of Israel. All PLO operations start, one way or another, outside Israel, and whether they are put into action straight away over the border or, after a delay, at a deeper internal point is immaterial. Terror is terror.

Individually, all humans grieve equally at loss. Collectively, nations and peoples react in distinctive ways. Israel, inheriting the legacy of a Holocaust in which six million Jews were killed, would be untrue to its deepest purpose if it did not regard the life of each of its citizens as a treasure and if it did not claim and assert a right of self-defense when they are assaulted. This does not justify every step Israel takes in the name of self-defense, but it does express the fundamental condition of Israeli national life. Those who are seeking to alter Israeli policy -- Palestinians in their way, Americans in theirs -- assume a special obligation to take this into account.