Mideast cease-fire gains strength each day it holds

"Four hundred dollars for this beautiful carpet? I am insulted. Not less than 2,000." He turned, folded the dusty kilim and crammed it back on the shelf. "Never. Not less than 1,500."

He held out a gaudy, machine-made, doormat-size Turkish rug: "This for you."

Half an hour later, all smiles and promises of eternal friendship, he handed over the kilim for $650.

This is bargaining in the Middle East. From irreconcilable stands, firmly held views, absolutelys, nevers, huffing and puffing . . . a deal can be cut. It is the bazaar mentality and it pervades society to such an extent that lifelong foes even can come together if the right arrangement is made. The operative consideration: both sides want to make a deal, no matter what is said.

This is the setting into which the US-negotiated cease- fire between Israel and (indirectly) the Palestine Liberation Organization has come. Amazingly -- for the quick- silver world of the Middle East -- the cease-fire is two weeks old. The merchant has not thrown up his hands. The customer hasn't stalked out.Maybe a deal can be made.

"Every day that goes by gives it a little more credence," says a US diplomat in Israel. "Don't be overly optimistic, it could end in gunfire tomorrow. But i think both sides see it as in their interest to keep the lid on."

For the moment, at least, the cease-fire represents only the narrowest of diplomatic openings for the US in the Middle East. But an earlier such opening, the January 18, 1974, disengagement agreement between Egypt and Israel (also negotiated by the US) grew eventually into the Camp David peace accords. Now almost three years old, these accords are a genuine institution.

In the past week the Reagan administration has hinted of parlaying the cease-fire into a broader Lebanese settlement. Lebanese Prime Minister Shafiq al-Wazzan says he has heard nothing official, though he would welcome expansion of the United Nations forces in his country.

US diplomats in the area admit that they have not yet detected anything deeper out of the State Department than a desire to see the cease-fire hold, so that violating it -- like backsliding on a bad habit -- looms as a worse offense the more time goes by.

Moderate Arab leaders such as Egypt's Anwar Sadat are sensing that the US stands on the brink of a fresh diplomatic effort in the Middle East. They are urging, as Mr. Sadat did Aug. 5 in Washington, that the US begin to deal directly with the PLO (whose presence in Lebanon is a major cause of that country's problems).

The response from Washington is that the PLO must first recognize Israel's right to exist; the response from Israel, Prime Minister Menachem Begin said Aug. 6, is that under no circumstances whatsoever will Israel negotiate with the PLO.

It is a great leap to go from labeling the PLO a terrorist organization to seeing it as a party to peace and eventually to territorial negotiations. But if the July 24 cease-fire succeeded in ending the fighting in northern Israel and southern Lebanon, it also gave the PLO more status as a party to the proceedings.

In the past two weeks, violations of the truce have petered out. More importantly, what violations have been claimed by one side have been quickly denied by the other.On Aug. 5, for instance, the Palestinian news agency, Wafa, claimed that Israeli gunboats opened fire on coastal areas near the city of Tyre and that Israeli helicopters flew over the area. But Israeli military sources denied this was the case.

The rush to disclaim violations is remarkable when one recalls that, as a guerrilla organization, PLO thrives on military action. Under its policies of preemption and retribution Israel rarely restrains itself or denies its activities (they are generally popular in Israel).

One detects today in Israel an atmosphere of war-weariness, notwithstanding steady popularity of custom- made, near legendary, Israeli hit-and-run raids. A tragically messy operation, such as the July 17 bombing of Beirut, seems to cause great revulsion among many Israelis.

"I have been in five wars," says an Israeli sabra (native) who drives a cab in Tel Aviv. "I am tired. I want to live in peace. The young people, they want to be like young people in America and Europe -- not to go to the military every year for one month. They want to be normal."

This man has his counterparts in Lebanon -- natives or Palestinians in exile -- who see things the same way: "Anything is better than this," a Lebanese clerk said with a sigh last month. "It is time for the fighting to be over."

But, of course, the keys are the leaders on both sides.By showing moderation and not responding to Israeli cease-fire violations, PLO chairman Yasser Arafat gains points as a moderate and encourages the new US policy of pressuring Israel. If he were to return to military action (as he still could), Mr. Arafat would lose the benefits of the "recency effect" -- i.e., that the last foul blow was struck by Israel July 17.

On the other hand, by keeping warplanes and commandos grounded at their northern Israeli bases, Mr. Begin regains the confidence of the Reagan administration. He also forces the PLO to remain on good behavoir.

But a finger in the dike here can lead to a leak of violence there. Some Middle East analysts are worried that a Palestinian-Israeli "proxy war" is under way in Europe. The PLO blames Israeli agents for both the June 1 shooting in Paris of PLO representative Naim Khader and the Aug. 1 shooting in Warsaw of Al-Fatah leader Abu Daoud.

Still, plugging the leak on the border between Lebanon and Israel has been a major accomplishment. In Nicosia, a diplomat who watched the 1974 cease-fire in Cyprus grow slowly into formalized, if sometimes sluggish, bipartisan meetings, observes: "It is a long way to go from cease-fire to comprehensive, permanent peace. But every peace has to start by stopping the shooting."