People who are baiting Ronald Reagan for failing to "deliver" against the Christmas terrorists should stop it. They should, instead, be praising him for shaking hands with the realities of what can be done in the way of "swift and effective retribution" -- the course he vaingloriously promised at his first inauguration.

The president likes to talk big; he always has. When he was governor of California and bedeviled by student protesters, he spoke carelessly of the "blood bath" he would face, if need be, on the campuses. Many people like that sort of bluster -- and approve the vengeful violence implicit in it. But the rest of us should be glad that the leader of the western world has learned to think of consequences.

The provocation for him in the present instance is extreme. Except for Nicaragua's leader, Daniel Ortega, there is no world figure who riles him more than Muammar Qaddafi of Libya. "Flaky" and "barbarian," as he called him in his news conference, are not terms too strong for the Fagin of Middle East assassins.

Qaddafi has behaved with his usual obnoxiousness in the wake of the carnage at the Rome and Vienna airports. First, he praised the terrorists for their "heroic operation" -- later denied all complicity.

Subsequently, when a U.S. carrier started steaming around the Mediterranean, he threatened to "attack Americans in their own streets."

In the 12 days following the atrocities, the administration stumbled and stuttered in its search for the right note between reason and retaliation.

First, there was the unexpected admonition to Israel -- which has always practiced "swift," if not "effective," retribution -- to be restrained. "Every attempt," said an administration official, "is being made to temper the expected Israeli response."

With the president in California and administration experts scattered, the State Department and the Pentagon began to argue. State put out a stiff statement about terrorists having to "pay a price." Defense was holding out for retaliation in an "appropriate, measured and focused way."

The White House did not wish to give up the idea, or at least talk, of military retaliation. In the hope of causing Qaddafi some sleepless nights, officials spoke mysteriously of "options."

Reagan, of course, longed for a sequel to his one triumph against terrorists, the successful stalking of the Achille Lauro hijackers. But such a satisfying replay was beyond his grasp. No one knows for sure the whereabouts of Abu Nidal, the supposed mastermind of the Rome-Vienna massacres. No one wanted to start World War III on speculation.

Sending B52s over Tripoli would not help. Bombs kill the just and the unjust alike, and carpet-bombing Tripoli, while relieving certain bursting hearts, would do as much as it did in Hanoi. It would blow up Reagan's chances for making peace in the Middle East.

The hawk, Defense Secretary Caspar W. Weinberger, was the voice of reason: "We have to bear in mind . . . the international effects of our taking unilateral military action."

So Reagan, to the fury of the right wing, settled for economic sanctions. He despised Jimmy Carter's grain embargo on the Soviets -- a punishment for the Afghan aggression -- and lifted it immediately upon taking office. It was too expensive for the farmers and the Republican Party. But sanctions are his only weapon against terrorism. He imposed them against Nicaragua, another state he accuses of being a terrorist breeding ground. Since no other country has joined, they have a limited effect.

Now with Libya, sanctions can be equally futile, since the Europeans, while deploring terrorism, will not give up lucrative trade with its thug-sponsor.

It must gall Reagan to see that, in contrast, Qaddafi's allies are standing solidly with him. It is fear of Libyan hit-squads rather than brotherly love that keeps them in line.

If the Europeans would decide to stop doing business with Qaddafi, he might become a true pariah and less hospitable to suicidal fanatics.

But the ultimate solution was defined by the "flaky barbarian," who rarely says anything worth listening to. Holding court on a tractor and wearing a cloth envelope on his head, he said, "There are Palestinians everywhere. You must solve the Palestinian problem if you want peace and to bring an end to these actions."

He had spoken the hard truth that the new pragmatist in the White House is not willing to face over Israeli objections. The answer to terrorism is not military or economic; it is political.