Twice since President Reagan sent the Sixth Fleet into the Gulf of Sidra to challenge Libya, acts of terrorism have taken American lives. In both the explosion in the TWA jet over the Mediterranean and the attack on a West Berlin disco, American officials report that they detected a Libyan hand. They also point to a Libyan "master plan" of terrorism directed at American targets in Western Europe.

The Reagan administration was careful to say the Sidra operation was launched to assert a right of free navigation. That way it meant to spare itself the charge -- when terrorism resumed, as it was bound to -- that it had failed to bring it to an end and had perhaps even provoked more of it. Now that terrorism has resumed, the administration cites it to enlist the Western Europeans in further measures for the diplomatic and economic isolation of Libya. But the Europeans pause.

This is unfortunate. The isolation of Libya was right even before the Sidra operation: it promised to limit Libya's terrorist options in the West and was an essential complement to heightened intelligence cooperation and police vigilance. European arguments over the quality of proof of Libyan complicity in a given instance suggest an unbecoming reluctance to come to grips with the incontestable fact of Libya's record as an international outlaw. In fact, the reasons why Europeans hang back from thinning their Libya connections can appear starkly commercial. There is a no less disturbing tendency to dismiss Libyan terrorism as the distasteful product of a wrongheaded American Middle East policy and to focus on combatting homegrown terrorism, of which most European countries have more than enough. Recently, for instance, it was reported that France and Italy, to buy safety for their nationals, had for a time offered Libyan operatives free transit.

The Europeans can be forgiven, however, for wondering just what the American policy is to which they are being asked to sign on. Is it vigilance, isolation, war or what? It has been confirmed in Cairo that three times the Reagan administration invited Egypt to join it in an attack on Col. Qaddafi. Egypt is said to have declined, but some reports indicate that joint planning continues. Perhaps these accounts are part of a war of nerves. Perhaps they point to coming events. Europe, which is turning out to be a major arena of the battle the United States and Libya are waging against each other, has an evident interest in knowing what turn that conflict might take. So do Americans.