THERE IS WIDE agreement that Libya has as purely evil and mischievous a leader, Muammar Qaddafi, as exists anywhere. His cackling over the murder of Anwar Sadat expresses the essence of the man. But why is he the menace that he indubitably is? Part of it is his Soviet connection, but a large part is his American connection. As the single largest purchaser of Libyan oil, the United States is, financially speaking, the leading sponsor of Libyan adventurism and terror.

Edwin Meese III, counselor to the president, was asked about this on "Issues and Answers" yesterday. Not without embarrassment, he made a glancing reference to the "balance of interests" that the United States has with Libya. Then he slid off into the easier terrain of American military cooperation with the real and likely targets of Libyan aggression.

Such cooperation and the protection and assurance that accompany it are certainly a necessary aspect of American policy to underline in the fragile post-Sadat environment. But what can the intended beneficiaries of American patronage understand when they contemplate the "balance of interests" that the administration maintains with the Libyan regime? How serious about Col. Qaddafi will anyone think Ronald Reagan is as long as a thousand or more Americans remain in Libya helping him pump his oil, and as long as American companies pour billions into Libya's oil coffers every year?

Imagine the electrifying effect of an American announcement that the United States no longer has a "balance of interests" with Libya, it has a single interest: to do whatever it legally can to isolate, weaken, punish and hurt Col. Qaddafi, financially as well as politically, and to take the United States out of bankrolling him.

Imagine an administration announcement that it was going to take the Libyan case to the United Nations and that, if Libya's protectors foil an effort there, the United States would finally join the many other nations that have already cut most of their ties, including the key economic ties, with Tripoli.

It will be said that Libya can sell its oil and find technicians elsewhere, that the Soviets will move in more deeply, that there will be costs, and so on. But none of these arguments can outweigh the advantage of ending American equivocation and putting the United States squarely on the opposite side of the fence from a gangster regime.