Shamir: confident, stubborn hand at Israel's helm. His government will fall rather than talk to the PLO, inside observer predicts

To his close advisors and friends, Yitzhak Shamir is an affable man with a subtle sense of humor, an enormously self-confident leader who is most impressive in small groups rather than large crowds. ``But you have to enjoy his confidence to see that side,'' concedes a senior aide to the man who last week began his third term as Israel's prime minister.

To most outsiders, the 73-year-old Israeli leader has a different image: dour and taciturn, a patriot stubborn to the point of inflexibility on Israel's interests.

As Mr. Shamir prepares to steer Israel through four of the most crucial years of its history, his success may well hinge on whether such qualities, a key to his political success at home, will also wear well in the changing international arena in which he will now have to maneuver.

Defenders say the diminutive (5 ft., 4 ins.) Shamir is just what Israel needs: a man unwilling to budge in the face of mounting foreign pressure to deal with his country's arch-enemy, the Palestine Liberation Organization's Yasser Arafat.

Detractors worry that Shamir may not be nimble enough to adjust to new diplomatic realities, thus straining ties with the United States and European allies and, setting the year-long Palestinian intifadah (uprising) on a more radical course.

All sides agree that Shamir will be under enormous pressure in the coming months to retrieve Israel's declining diplomatic fortunes. Mr. Arafat scored a major diplomatic success two weeks ago when the US agreed to open a dialogue with the PLO.

Perhaps because his greyish public persona contrasts so strikingly with his colorful background, Shamir has remained something of an enigma to his countrymen.

Shamir was born in Poland, where he studied law before emigrating to Palestine in 1935, 13 years before the founding of Israel. Most of the family he left behind perished in the Nazi Holocaust.

A follower of Zeev Jabotinsky, the Russian-born Zionist leader who advocated Jewish control of all of Palestine, Shamir quickly joined the Jewish underground in the struggle to end British rule over Palestine and to establish a Jewish state.

As a member of the resistance group Irgun, headed by Menachem Begin, later a prime minister of Israel, then as head of the more radical Stern gang, Shamir frequently advocated assassination as a weapon against British rule. In 1948, four members of the group gunned down Count Folke Bernadotte of Sweden, a UN representative who advocated dividing Palestine into Jewish and Arab states. Four years earlier the group had killed Britain's minister of state for the Middle East, Lord Moyne, in Cairo.

``He is the incarnation of England's anti-Zionist policy,'' Shamir reportedly told his cohorts. ``He is the one we must destroy.''

One of the most hunted underground leaders, Shamir was arrested three times as a terrorist before being deported to a prison in Eritrea. Following a dramatic escape he lived in exile, returning only after Israel was founded in 1948.

Shamir spent 10 years in the Mossad, Israel's intelligence agency, eventually directing European operations. A prot'eg'e of Mr. Begin, he entered the Knesset in 1977. After Begin's abrupt departure from politics in 1983, Shamir spent a stormy year as prime minister. His served a second, two-year term as prime minister during the second half of Israel's ``national unity'' which ended last week.

One principle that has guided Shamir's long public career is the right of Jews to control all of Palestine.

``His ideology is like an open book,'' the senior aide says.

Admirers of Shamir, who has survived countless challenges from political rivals in and outside his right-wing Likud bloc, say he is a shrewd infighter who usually manages to outfox his adversaries.

A Labor Party adversary discounts Shamir's acumen. ``His greatest asset is something we created - the deadlocked inner Cabinet,'' says a senior advisor to Peres, who is now finance minister. The ``inner Cabinet'' consisted of 10 members, five each from Labor and Likud, which often produced deadlocked votes.

``At the start of the national unity government we needed a mechanism whereby Labor could block new Jewish settlements in the West Bank,'' the aide says. It worked. But Shamir also used the same mechanism to block peace moves.

``To have that mechanism at his disposal he could easily block anything he wanted to,'' adds the Labor Party source. ``But it was a built-in mechanism, not a brilliant tactic on Shamir's part.''

Whatever Shamir's parliamentary skills, his penchant for playing the spoiler on peace moves could prove far riskier in the new diplomatic setting created by the start of the US-PLO dialogue.

Despite talk of a new initiative, aides say Shamir is wedded to old - critics say anachronistic - policies to break out of Israel's diplomatic isolation. The centerpiece is the 1979 Camp David formula he once opposed. It calls for limited self-government for Palestinians in the West Bank and Gaza Strip. Except as an interim step leading to a final settlement, Camp David is universally out of favor.

``As a diplomatic move, it's not going to measure up to the call,'' cautions Tel Aviv University professor Clinton Bailey.

``In time [autonomy] will drop away,'' predicts a former senior Foreign Ministry official. ``What will emerge is a plan for direct talks with the PLO.''

Whether such a transformation occurs - and whether it occurs because of or in spite of Shamir - remains to be seen.

``Shamir will not make the change,'' predicts the former official. ``The only way it will happen is if pressures build and the government falls over the issue.''