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Israel-US ties: never better. Israel and the United States now have the best relationship they have had in years. That extraordinary degree of cooperation underscores Israel's dependence on the US. But though US aid to Israel is at an all-time high and President Reagan is a staunch supporter of Israel, there is still friction in the relationship.

ISRAEL is enjoying the best relationship with an American administration it has had in years. That view is shared by Israeli and American officials who, in interviews, said the degree and scope of cooperation between the two nations now is unprecedented.

``The relationship between the United States and Israel has never been better in the 38 years of formal relations,'' says Arthur Berger, spokesman for the US Embassy in Tel Aviv. ``It runs the gamut from diplomatic cooperation to the search for peace. We don't see eye to eye on everything, but the disagreements are more on details and tactics.''

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``We are probably at the apex of bilateral ties since the state was established,'' says Harry Wall, executive director of the Anti-Defamation League's Jerusalem bureau. The ADL monitors US press coverage of and shifts in US public attitudes toward Israel. ``I can't think of a better period in terms of political, strategic, and economic cooperation,'' he adds.

For Israel, good ties with the US are essential. The Israelis anxiously monitor every nuance of change in US positions on Middle East issues. The government is aware of Israel's increasing economic and political dependence on the United States and expends enormous effort in smoothing over differences that arise.

Only last spring, Israel feared it might clash with the US over the best method to restart the Mideast peace process. Jordan's King Hussein had agreed to pursue a joint peace strategy with the Palestine Liberation Organization in February 1985, then garnered US support for his efforts when he visited Washington in May.

King Hussein focused his efforts on convincing the US that it should start talking to the PLO. Israeli officials regarded the prospects of the PLO being included in the peace process with alarm. An administration decision to accept the guerrilla organization as a partner to negotiations would have caused a serious rift in relations between Israel and the US, officials here say.

Israel regards the PLO as a terrorist organization and refuses to consider its inclusion in any negotiating process.

Even moderate Arab leaders such as Hussein, however, say the peace process cannot move forward without the PLO. The PLO is regarded by the Arabs as the legitimate representative of the Palestinians. All sides agree the Palestinians must be included in any negotiations over the future of the territories that Israel has occupied since the 1967 Arab-Israeli war, but all do not agree that the PLO is their legitimate representative.

``Should negotiations ever get under way, Israel is going to be expected to perform,'' says one Israeli analyst. ``Should the PLO stand up and say, `We recognize Israel,' things could take on a very different coloration.''

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Chances of that happening dramatically decreased last month, however, when Hussein formally ended his joint efforts with the PLO leadership in a 3-hour televised speech. The King blamed the PLO, not Israel or the US, for what he termed another missed opportunity for peace.

Hussein's Feb. 19 break with the PLO dashed hopes of a breakthrough in the peace process, but also reassured the Israelis that they would not be pressured into concessions they are unwilling to make.

Throughout the US involvement in Hussein's efforts, one Israeli official says, Israel was confident that the Reagan administration would not push the Jewish state as hard as previous administrations in search of a breakthrough.

The US administration's restraint was due partly to its perception that Israeli Prime Minister Shimon Peres was forthcoming in his efforts to ease the King's way to a negotiating table. Throughout his term, Mr. Peres has scored points with the Americans for his apparent flexibility and willingness to work with the administration -- an image that US diplomats say is in sharp contrast with that of his hard-line Likud predecessors, Yitzhak Shamir and Menachem Begin.

But the US approach is seen here essentially as the result of President Reagan's unswerving support of Israel.

``Mr. Reagan sees Israel as such an asset,'' says Eitan Ben Tzur, head of the Foreign Ministry's North American desk. ``He wants to have peace in the area, but one that would be, first of all, acceptable to Israel. I believe he regards Israel more highly than he regards any other country in the area -- because of its pro-Western leanings, its shared values with the United States, its strategic importance, and its military might.''

Israel measures US support in terms of the economic and political backing the US extends, the degree of cooperation between the military establishments of the two nations, the tone of US press reports, and readings from public opinion polls.

The complex network of relations between the two nations sometimes makes their dealings appear more like those between family members than between two sovereign states. Putting Israel's economy in order

The US's deep involvement in Israel's economic recovery program is but one example of the unique relationship, officials here say.

When Peres formed his government in September 1984, its first priority was to save Israel from economic collapse. His first visit outside the country was to Washington, where he requested and was promised $1.5 billion in supplementary aid.

Along with the aid, however, came the establishment of a joint US-Israeli economic committee designed to work out concrete steps that the Israelis could take to put their economic house in order. The committee continues to meet periodically.

Amnon Neubach, economic adviser to Peres, says that pressure exerted by the US economists on the joint committee helped to convince Peres that Israel had no choice but to take Draconian measures to restore the economy.

``When they [the US economists] came in July 1985, the figures on the economy were very bad.

``The Americans told me that they did not believe we were going to do something and they said they did not know if they would recommend to help us anymore. They pushed a little the prime minister,'' Mr. Neubach says. At the time the US had not yet transferred the emergency supplementary aid, and Israel desperately needed the funds to replace its depleted foreign-currency reserves.

Neubach emphasizes that the ``pushing'' has always been done in ``a polite, friendly manner. The Americans have given us the impression they really want the economy repaired -- without telling us how we must do it,'' he says.

Economic cooperation is just one way Ronald Reagan's presidency has been good for Israel, according to the Israelis. Reagan has been more consistently supportive of Israel than any US President since Harry Truman. His secretary of state, George Shultz, was viewed with suspicion here at the time of his appointment because of his ties with the Arab world through his former employer, an engineering consulting firm called the Bechtel Group. Mr. Shultz now is regarded here as strongly pro-Israel.

The Israelis say they believe the President's support is based on his belief that the United States needs a reliable ally in the eastern Mediterranean to serve, in the words of one analyst, ``as a bulwark against the Soviet Union, which is Public Enemy No. 1 in Reagan's mind.''

But the Israelis say they also believe the President's strong support of Israel stems at least partly from a deep-seated emotional identification with the tiny nation.

``In his best known cinema roles, Reagan was a cowboy,'' Wall says. ``He can identify with this `lone ranger' over here making this one part of the area safe for Americans and American values.''

That identification was enhanced, according to Israeli analysts, last year when a spate of terrorist attacks claimed American lives in Europe and the Middle East. The President and Shultz came out in favor of the Israeli policy of retaliating against terrorist attacks whenever possible.

Israelis list several areas in which they feel relations between the two nations have substantially improved under the Reagan presidency:

US military and economic aid to Israel has grown to an all-time high. It stands now at a combined total of $3.75 billion for fiscal 1986. All of the money is in the form of grants. Israel is the single largest recipient of US foreign aid. Although Israel is considered a US ally, there is no treaty commitment on either side.

The administration became more directly involved in Israel's economy, with Shultz himself taking a personal interest in the measures Israel adopted to repair its tattered economy after Peres assumed the premiership in September 1984. A joint Israel-US economic team was established.

In 1985 the two nations signed a free-trade pact that will eliminate all tariffs between them within 10 years.

Israel became one of the first US allies to enthusiastially embrace Washington's offer of participation in research for President Reagan's space-based Strategic Defense Initiative (popularly known as ``star wars''). It also granted the US permission to build a Voice of America radio transmitter on Israeli soil, after other nations turned down the request. The facility will beam broadcasts to the Soviet Union.

In the United Nations, the US has risked the wrath of Arab states by consistently vetoing key UN Security Council resolutions that would have condemned Israel for a number of actions.

In the peace process, the US has continued to keep its 1974 pledge not to negotiate with the PLO until that organization recognizes Israel and accepts UN Security Council resolutions 242 and 338. The two resolutions call for Israel's withdrawal from territories it occupied in the 1967 Arab-Israeli war, but assert its right to exist. The PLO rejects the resolutions because the Palestinians are referred to only as a refugee problem, without mention of Palestinian self-determination.

The United States has backed Israel's insistence that any negotiations between Israel and its Arab neighbors be direct negotiations, without preconditions.

The two nations held joint military manuevers in 1985, increased their sharing of intelligence information, and generally enhanced their strategic cooperation, according to Israeli military sources. The joint battle against terrorism

In 1985, a year that saw an increase in acts of terrorism, the US and Israel drew closer in their fight against terrorism. President Reagan initially seemed to condone Israel's Oct. 1 air raid on PLO headquarters in Tunis, which killed 70 people. Eventually, however, the US abstained from voting on a UN Security Council resolution condemning the bombing.

Israel later applauded the US for intercepting an Egyptian airliner carrying the suspected hijackers of the Achille Lauro cruise ship.

In short, in virtually every area that counts, Israel and her most important ally appear to have forged ever-stronger ties since Reagan assumed office in 1980.

The improvement in ties has continued despite strains that emerged after Israel's invasion of Lebanon and seige of Beirut in the summer of 1982. Mr. Ben Tzur says he believes the months following the June 1982 invasion of Lebanon may have been the bleakest days in US-Israeli relations -- both on a government-to-government level and in terms of how Americans viewed Israel.

Relations between then-Prime Minister Begin and his defense minister, Ariel Sharon, and their American counterparts grew more strained as the scope of the Israeli invasion became clear.

Relations between the two nations began to improve again when Lebanese President Amin Gemayel abrogated the May 1983 US-brokered agreement between Israel and Lebanon that was to have ended Israel's occupation of Lebanon. Under heavy Syrian pressure, Mr. Gemayel abrogated the accord nine months after it was signed.

Shultz had considered the agreement his first major achievement as secretary of state, and was reportedly outraged when Gemayel backed out of it. The collapse of the accord seemed to underscore for the Americans the unreliability of some Arab regimes.

The next crisis in relations came when Reagan announced that, during a state visit to West Germany, he would visit a German war cemetery in Bitburg. The cemetery, it turned out, also contained bodies of Nazi SS troops. There was an outcry in the US Jewish community, and a more muted protest from the Peres government. In the end, Reagan proceeded with his visit, though he made it much shorter than originally planned. In June 1985, relations were strained again during the hijacking of a Trans World Airlines jet and its mostly American passengers by Shiite Muslim fundamentalists.

The Shiites, who finally landed the plane in Beirut, demanded that Israel release hundreds of Lebanese prisoners it was holding in an Israeli prison in return for the freedom of the 39 American hostages. For several tense days, Israel and the Reagan administration were at a standoff over who should appear to give into the hijackers' demands. Ultimately, the Americans were released and Israel gradually released its prisoners.

Bitburg and the TWA hijacking were minor incidents, however, compared to the arrest in Washington last fall of Jonathan Jay Pollard, an American accused of spying for Israel.

The Pollard affair had the potential to seriously damage relations between the two nations, both US and Israeli analysts agree. Mr. Pollard was a civilian employed in naval intelligence. He is accused of passing top-secret information to Israel in return for cash payments. Eventually, Israel admitted that it had been spying on the US, said that the incident was an isolated and unauthorized one, apologized, and allowed an American team to question Israeli intelligence officers involved with Pollard. Israel ultimately returned the stolen documents.

Both Israeli and US officials now say that the Israeli response contained what could have been a disastrous situation for Israel. Officials of both countries also say that the Pollard case says a lot about the limits to bilateral ties between nations -- no matter how close those ties may be.

``The bottom line is that Israel simply cannot completely trust anybody -- even us,'' observed one US analyst in Tel Aviv.

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