Israelis are conducting a painful debate over whether, in order to get back three prisoners lost in Lebanon, they were right to have freed 1,150 Arab prisoners, most of them Palestinians and many convicted terrorists. The release could hatch more terror, by some of those released or by others emboldened by the prospect of gaining liberty in another exchange. But, little as they care to hear it, Israelis need to be reminded that the problem -- the familiar Palestinian problem -- is only in the second instance terror.

In the first instance it is politics. What can still be done to turn Palestinian energy from rage to conciliation? The prisoner exchange marked the failure of one Israeli answer. The previous Israeli government had invaded Lebanon primarily to solve the Palestinian question -- by destroying the last adjacent PLO presence and by opening the way to absorb the occupied West Bank fully into Israel. Only the first of these two goals was achieved.

The new Israeli government has since accepted a requirement for a political solution. So far, however, Prime Minister Shimon Peres has accepted it only in words. He has pleaded preoccupation with leaving Lebanon and saving the economy. While warily accepting the latest American bid to renew the peace process, he has essentially sat on his hands. King Hussein of Jordan, Israel's would-be partner, has in effect reinforced the Peres strategy by keeping his own steps toward accommodation well short of the point at which the United States would be honor-bound to insist that Israel respond.

In the American view, the onus for continued stalemate remains on Hussein, and it's easy to see why Israel prefers it that way. Its plate is already full. Peres cannot possibly want the coalition-busting West Bank issue to come up until he can show a skeptical electorate there's something good in it for Israel. Besides, many things are going well for Israel, in the area and in Washington.

In the area, Israel is cutting its losses in Lebanon. Peres' effort to warm the "cold peace" with Egypt may be moving. Syria is intransigent but isolated. Iran and Iraq continue their mutual bleeding. An Egyptian- Jordanian-Saudi-Iraqi axis of moderates is holding. The '70s notion of an invincible Arab juggernaut faded as oil prices fell. The Arab countries smart under American favor for Israel but decline to put their bilateral relations with Washington on the line.

In Washington, Israel enjoys what the head of the Israel lobby calls its best relations ever. The president is the soul of warmth, and the coldness Israel once feared from the Bechtel brothers, Caspar Weinberger and George Shultz, is gone. Annual aid is rising toward the (unadjusted) dollar level of the whole Marshall Plan. Political disruptions like the krytron question are quickly eased. Israelis hope -- here is the most difficult current problem area -- that American arms sales to friendly Arabs can at least be contained.

All of this makes an appealing case for standing pat and waiting for King Hussein either to corral Arafat and make Israel an offer it cannot refuse or, more likely, to fall short. Politically, it is turning out to be no strain for Peres to be open enough to negotiations, and to calls for improving the "quality of life" on the West Bank, to satisfy the Reagan administration; Congress is even less demanding. Bitburg removed Washington's residual inclination to demand major economic policy reform in return for extra aid. There is no expedient argument for Israel's doing things differently.

Everyone is tired of alarms of doom and crisis ahead in the Middle East. Let it simply be stated that Israel's policy is tragically shortsighted. The considerations that allow it to relax on the peace front would be better used as cushions for the risks it must take sooner or later if it is to break the status quo. Israelis are always saying pressure only freezes them. They are under no pressure. It will never be easier. Peres has not got that much time left on his lease on the No. 1 job.

Satisfying the United States is one thing, the routine business of Israeli diplomacy, but it leads nowhere. Drawing Hussein out of his crouch is what counts. He frustrates Israelis, but, with good reason, he entrances them with his promise of movement to come. Everybody in the Middle East knows what is necessary: for the Israelis to give Hussein something he can work with.

The Israelis have spent 18 years "creating facts," making it harder for Hussein and then protesting that he does not deliver. They have a dozen ideas they could pull out of the drawer to get something started without undermining their security or bargaining position. More than almost anyone else in Israel, Shimon Peres knows what to do. Destiny beckons.