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Essentially, Dayan's disagreement with Begin was ideological. He accepted a Cabinet decision last May that the Israelis would not allow the creation of a Palestinian state in the West Bank and Gaza. But he disagreed profoundly with Begin's view that, at the end of the five-year autonomy period specified by the Camp David accords, Israel would insist on pursuing its claim of sovereignty over those Arab-populated areas. Two years ago, Begin agreed to leave the disputed question of sovereignty unresolved. Now the Premier was taking a tougher line, and Dayan felt that he could not go along with it. "That is why I resigned and why Begin accepted it," Dayan said last week, "understanding as he did that we don't see eye to eye on this important question."
In the best of times, Dayan's resignation would have been a blow to the Begin government. His defection was made doubly bitter when the Supreme Court declared the West Bank settlement of Elon Moreh illegal and ordered its evacuation within 30 days. The settlement had been established last June by members of the fanatical ultranationalist Gush Emunim movement, aided by Israeli army vehicles and air force helicopters. A week later, the court was petitioned by 17 Arabs whose land had been seized for the development. Under the prodding of Agriculture Minister Ariel Sharon, the Cabinet supported the establishment of Elon Moreh by a vote of 8 to 5. Among the dissenters: Dayan and Defense Minister Ezer Weizman. Begin was absent from the meeting, but he told his supporters: ''Ever since the concept of law took root in the human race, there was no more legal an act than Jewish settlement in all parts of the Jewish homeland.''
On an earlier occasion he vowed: ''There will be many more Elon Morehs.''
In arguments before the Supreme Court, the government tried to justify the settlement, which is located on a rocky hill overlooking the Arab town of Nablus (pop. 70,000), as essential to Israeli security. But several military experts, including former Army Chief of Staff Haim Bar-Lev, disagreed. On the contrary, they testified, the settlement might actually hinder military operations in the area because of its proximity to Nablus. The court agreed and, in a landmark decision, ruled unanimously that the settlement was illegal.
The decision left Menachem Begin with a serious dilemma. A spokesman for the Cabinet promised that the court's decision would be obeyed. But how the evacuation order is carried out might offend the National Religious Party and other components of his coalition. Hotheads of the Gush Emunim were threatening last week to call up 50,000 people to fight with the army over Elon Moreh. To appease them, Begin talked about finding another settlement site on public land and of accelerating a plan to develop six new settlements on the West Bank. That in turn may persuade Ariel Sharon to try to convince his Gush Emunim supporters that Begin's proposal should be accepted and that they should avoid a clash with the army.