ISRAEL: The Lesson of Elon Moreh

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More shocks follow Moshe Dayan 's resignation ''I told the Premier that we are subjecting our people to daily shocks.'' lamented an aide to Menachem Begin. ''and we have gone well beyond their ability to absorb those shocks.'' So it seemed.

Moshe Dayan had resigned as Foreign Minister in basic disagreement over Israeli policy for the occupied West Bank and Gaza Strip. A day later, the country's Supreme Court struck a body blow at the Begin government's policy of permitting Jewish settlements to be established in the West Bank on the pretext that they strengthen Israel's ''security.''

The same day, the government removed the subsidies for cooking oil and other household products, and prices for those items jumped by 50%. During a stormy session of the Knesset, where the ruling Likud coalition now has a majority of only six seats, Begin survived a series of no-confidence motions. But observers were predicting that it was only a matter of time before the beleaguered Premier would be obliged to call new elections.

Perhaps the only mystery in the Dayan affair was why he remained in the Begin government as long as he did. Dayan had made no secret of the fact that he disagreed with Begin's hard-line policy in dealing with the Palestinians. He genuinely want ed to reach some kind of agreement with the Arabs of the West Bank and Gaza over their future relations with Israel (see box); Begin seemed content to let the status quo drift on forever. Because of this disagreement, Dayan refused to head the Israeli delegation in the autonomy talks. In he was further iso lated from the negotiations by illness he underwent surgery for removal of a malignant intestinal tumor).

Since then, Dayan has chafed at the performance of the Israeli delegation under Interior Minister Yosef Burg, a hardliner who was chosen to placate the National Religious Party and other right-wing members of the Likud coalition. The Foreign Minister, as Dayan acidly put it, was left to handle such marginal matters as "cocktails and ceremonies." He had played a vital role in the negotiations that led to the Camp David accords last year, and he reacted angrily to being on the sidelines this time. Even if he had not resigned, Dayan would not have attended last week's meeting in London between Burg, Egyptian Premier Mustafa Khalil and U.S. Negotiator Robert Strauss, who is eager to get the autonomy talks back on track. At week's end Strauss reported that there had been some progress in the negotiations. The three parties agreed that elections in the West Bank and Gaza need not be carried out under international supervision, but instead would be run by Palestinian and Israeli officials.

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