MIDDLE EAST: Whose Nerves Are Stronger?

"Right now there is psychological warfare," said a ranking Israeli official. "And only the side with the stronger nerves will manage." By late last week, the Carter Administration was more pessimistic about the outcome of the Washington peace talks between Egypt and Israel than it had been since negotiations began more than a month ago. At the White House, according to one Administration official, there was now "a sort of gnawing concern" that the talks might actually fail. In Cairo, Egyptian President Anwar Sadat gloomily remarked that he would not be astonished to see the negotiations break down.

That discouraging prospect was all the more frustrating to the U.S. since most of the outstanding issues had been settled. Indeed, according to an Israeli estimate, the draft peace treaty was "75% to 80%" complete. The two sides had reached agreement on such crucial issues as the end of the 30-year state of war and the establishment of relations, the exchange of ambassadors, the location of boundaries, the placement of troops and the role of United Nations forces, and Israeli navigation rights in the Gulf of Suez. Egypt and Israel had also reached a meeting of minds on the future of two Israeli-built airbases in Sinai and the number and size of Egyptian fortifications in the desert peninsula.

The main obstacle is finding the right language for the thorniest problem of all: the "linkage" between the treaty and further negotiations toward a wider peace between Israel and its other Arab neighbors. In the opinion of U.S. diplomats, the negotiators have actually had an agreement on a linkage formula for at least two weeks, but things seem to come unstuck when the delegations return home to seek the approval of their governments. Two weeks ago, for example, Israeli Premier Menachem Begin, who was on a visit to the U.S. and Canada, sent Defense Minister Ezer Weizman back to Jerusalem to secure the Cabinet's acceptance of a compromise proposal.

To Weizman's chagrin, the Cabinet rejected the proposal because the linkage between the Israeli-Egyptian treaty and broader peace negotiations was too strong. The document called for the two nations to begin practical negotiations on Palestinian self-government within a month of the treaty's signing. Six months later, general elections were to be held on the West Bank and the Gaza Strip that would set up a functioning Palestinian administrative council.

After the cabinet's vote, one senior official said: "It will be most difficult for even Begin himself to convince us to make more concessions." Some Middle East observers wondered whether Begin was in full control of his Cabinet; others speculated that he might privately welcome some of his colleagues' truculence. At week's end, after summoning his chief Washington negotiators to Toronto for consultations, Begin made plans to fly home to discuss the state of the negotiations with his parliament.