Seen through the fractured prism of Lebanese politics, there is a link between the hijacking of TWA Flight 847 and a piece of paper that was pasted in the window of the Melkart Cafe here four days ago.

"There will be no smoking or selling of hashish," the announcement said. "No electric games. No gambling. No drinking of alcohol of any kind. Signed: Amal Movement of the Tyre Area."

The posting of this announcement in a popular gathering place for the wealthy merchants of this southern Lebanese port city was a small but significant retreat for Amal, the Shiite Moslem militia whose leader, Nabih Berri, has become a central figure in the TWA hijacking drama in Beirut. It was a tacit acknowledgement that Amal's more radical and fundamentalist rivals, who do not permit smoking and drinking, chiefly Hezbollah, or Party of God, are gaining strength in this region.

Amal is linked to the hijacking because the 40 American hostages, in the word chosen by one well-informed observer here, are now "pawns" in what is seen from here as a larger struggle for dominance in southern Lebanon between these Shiite factions.

For Amal and Berri, who thrust himself into the center of the drama by assuming the role of negotiator for the original hijackers, the stakes are high. As he maneuvers to win the release of more than 700 Arab prisoners, most of them Lebanese Shiites and many of them Amal militiamen, who are being held by Israel at its Atlit Prison, he and the loosely organized militia he heads are performing on a world stage.

"The question was why Berri got involved," said a well-informed, western source here. "It is now seen as a struggle between Amal and Hezbollah for dominance of the south, and the Americans have become pawns in it. Whoever gets them the Shiite prisoners held by Israel out, or gets credit for it, is going to get one hell of a lot of support in the south."

The source added: "A showdown between Amal and Hezbollah is inevitable. It's going to come, and it will be affected by the hijacking, whether Berri emerges as a very strong man or a loser."

While Americans have reacted with anguish over the hijacking and the fate of the hostages, it is clear from a day in southern Lebanon that there is strong support here for the hijackers' demands and for Berri's role in trying to achieve them.

Most of the prisoners held by Israel are from southern Lebanon and their families have been pressing Amal to act to free them. In a country that has been at war with itself for 10 years and has seen countless car bombings, kidnapings and political murders, the hijacking of one Boeing 727 aircraft and its passengers and crew does not seem all that extraordinary.

"If they release them the TWA hostages , it is right for the American people but wrong for my people," said Daoud Daoud, the chief Amal political operative in southern Lebanon.

"If people say they are sorry, they are lying," added a young Amal activist. "They think this is the only way to fight Israel -- to get America."

The young man, and others, seemed unconcerned about the hostages, whom he called "guests in our country."

Viewed as a struggle for supremacy in southern Lebanon, the hijacking is the latest episode in a drama that began with the June 1982 Israeli invasion and the three-year military occupation that followed. The occupation radicalized much of the predominantly Shiite population of this poorest and largely overlooked part of the country. When the Israelis left this spring the local battle for control began.

But the Israelis left behind a "security zone" just north of the border, where their own soldiers and civilian security agents remain active, and the Israeli-backed South Lebanon Army, a local militia made up mostly of Lebanese Christians, to patrol it. Amal and Hezbollah are now engaged in a deadly competition to be seen as the local force that drives the Israelis completely out of Lebanon and destroys their proxy force, the SLA.

Amal, which led the resistance to the Israeli occupation, is still dominant but appears to be losing ground. Most of the attacks in the Israeli security zone are thought to be the work of Hezbollah or other radical groups, which Amal has sanctioned as long as the attacks don't emanate from territory it controls and invite Israeli retaliation.

Amal's bowing to demands to impose Islamic fundamentalist practices in Tyre is another sign of a weakening, and this has already alienated the militia's main source of financial support, the city's merchant class.

After they banned the sale of liquor and hashish, halted the gambling and took away his pinball machines, the owner of the Melkart Cafe posted his own sign over the entrance. "This Place Is for Sale," it said.

Amal leaders deny the new Islamic religious rules in Tyre were forced on them, maintaining they are simply trying to impose law and order and remind the residents that there is still a war to be fought against Israel in the security zone. But this does not appear to be widely accepted. A regular customer at the cafe, saying he hoped the ban on liquor and gambling was just a "passing cloud," said Amal leaders had pleaded that they needed breathing space from fundamentalist pressures and "can't handle everything at once."

In addition, Amal's vow to keep southern Lebanon free of Palestinian guerrillas, so as not to invite new Israeli retaliation, reportedly has led to attempts by the Palestinians to link up with Hezbollah to continue their fight against the Israelis.

Amal is said to be in growing need of the return of the Shiites being held by Israel for the inevitable "showdown" with Hezbollah. Berri's role is complicated by the fact that neither he nor any other single leader is in complete control of the chaotic organization that goes under the name Amal.

A minister in the Lebanese government, Berri has long been absent from southern Lebanon while other local figures have risen to prominence. In interviews today, some of these, including Daoud, objected to references to Berri's central role in the hijacking drama.

Although even before the hijacking Israel had announced it would free the Lebanese prisoners, and said private assurances to this effect were passed on to Amal, Daoud said the militia was under pressure to gain their release quickly.

"The families of the prisoners in Israel always ask Amal what did you do to our sons," he said at an Amal military base outside Tyre. "You must do something, you must move the world, you must, you must." Now, he added, "They welcome this action. They say you did not forget our sons."

According to Amal leaders, the remaining 40 American hostages from the TWA flight became involved in this complex local Lebanese struggle because of Washington's close ties to Israel and the widespread view that if it chose to the United States could force Israel to do almost anything.

"We consider the United States the father of Israel, who is not yet 18," said Ali Jaber, another local Amal leader. "So the United States is still responsible . . . . We want the people of the U.S. to feel as we are feeling. The United States is the father of its son, Israel, and until now the father has not tried to solve what its son has done."