From its position stop a hill in western Jerusalem, the Israeli Knesset overlooks most of the new city. It is a rectangular stone building whose austere lines and sharp angles mold a basically classical exterior. Inside, the Israeli government meets to make decisions that will determine its country's future.

The Knesset combines the rough-hewn and informal with the grandiose. The legislative chamber, in which the 120 Knesset members most four days a week, contains simple beige swivel chairs arranged in concentric half-circles behind long curved desks. The ceiling is high and majestic, but the wall is carved in an abstract relief symbolizing peace; an incomplete circle represents the city of Jerusalem which was still split by barbed wire when this new seat of government was constructed in 1966.

The Knesset members reflect the informality if their surrounding. No more than three of the men wear ties; most are in open collar shirts and sport jackets. They lean back in their chairs or wander around the chamber, talking loudly with their neighbors while the Israeli defense minister tries to address them from the podium.

"Will all of you please sit down and be quiet," orders the Speaker of the Knesset, a short, round-faced man with a halo of gray, bushy hair adoring an otherwise bald head. "Have a little respect!"

The noise continues unabated.

"look, I'm sorry if I'm disturbing you so much really sorry,' says the Speaker a minute later-pounding his gavel. "But if you're not going to listen, will you please leave.

* * *

Israeli political parties have listened to each other, compromised with each other, joined government coalitions and left these same coalitions in a continuous process beginning with the establishment of the state in 1948. The highly ideological nature of Zionism and the diverse factions within the movement have given to the Israeli political system many intensely ideological parties. (Twenty-four parties competed in the first elections in 1949. Sixteen succeeded in winning seats.)

Government decision-making is left in the hands of party oligarchies which must form coalitions to gain a majority in the Knesset. Party power is reinforced by an electoral system that requires voters to cast their ballots for party lists rather than for individuals.

Mapai, the center socialist party, has traditionally dominated all coalition governments. This has also resulted in a disproportionate influence for the National Religious Party (Mafdal), an essential Mapai ally in the often shaky coalitions. Mafdal generally agrees to support Mapai's foreign policy in return for Mapai acquiescence to Mafdal religious initiatives.

Israeli secularists, who far outnumber religious adherents, often attack this quid pro quo. "Religious law infringes on my basic freedoms," says a Hebrew University student. "Just because the religious community doesn't want to ride buses on the Sabbath doesn't give them the right to prohibit others from riding."

Although Israel remains a vehemently -- pluralistic democracy, the 27 years since Israeli independence have seen a softening of ideological differences. The pragmatic needs of an established state, its rapid economic growth, and national defense requirements have brought about a greater degree of concensus than existed in 1948.

There are currently 14 political parties represented in the Knesset, ranging from the communists--the only legal communist party in the Middle East--to the conservative Cherut party. Most parties are affiliated with one of three major political blocks: the Labor Alignment centered around Mapai and including several more strongly socialist parties as well as the Israeli Arab parties; the two religious parties, of which Mafdal is the largest and the center right block of three parties, called Likud.

The Labor Alignment and its affiliated Arab parties hold 54 seats and, in coalition with Mafdal (10 seats) and a small Independent Liberal party, form the ruling government under Prime Minister Yitzhak Rabin. The Likud block has 39 seats and is the major opposition force in the Knesset.

The complexity of the Israeli political structure is matched by the diversity of views in the Knesset. Economic problems (inflatiuon is currently running at an annual rate near 50 percent social issues (e.g. how to absorb more than 30,000 immigrants a year and religious questions have prompted differing solutions from all parties and even within parties.

"But the sad thing," says an Information Ministry official, is that these issues have to take a back seat to our most pressing problem; defense."

A recent public opinion poll indicated that 50 per cent of the Israelis interviewed believe there will be another war with the Arabs this year. The possibility of war and what to do about it has generated fierce debate in the Knesset. The variety of opinion is great, but two fundamental positions can be discerned: that of Rabin's Labor Alignment, and that of Likud.

"Rabin has learned from the 1973 war," says the ministry official. "He is a pragmatic man. He knows Israel must make concessions."

Rabin does not follow former Defense Minister Moshe Dayan's post-1967 belief that Israeli military superiority alone will win peace with the Arabs. Nor does he agree with former Prime Minister Golda Meir that "there are no Palestinians."

"Rabin recognizes that the Palestinian problem is real and must be dealt with," says the ministry official. "He admits to the feasibility of a Palestinian state in federation with Jordan."

Rabin has made it clear that he is willing to make withdrawals in the Sinai in return for Egyptian political concessions in the nature of a non-belligerency pact or a demilitarization of the territory. Withdrawal in the Golan Heights presents a more difficult problem because of the great tactical advantage the Golan Heights would give to the Syrian army, traditionally the most virulently anti-Israeli of the bordering Arab states.

A West Bank solution will also be more difficult than a Sinai accord for political as well as strategic reasons. In order to entice Mafdal to join the government coalition. Rabin promised that "the people would be consulted" before any territorial concessions were made in the religiously important West Bank. Public opinion is sharply divided on the issue.

Likud takes a much harder line on negotiations with the Arabs. It demands a peace treaty in return for Israeli withdrawals, and believes the Rabin policy of piecemeal withdrawals in return for minor political concessions will only give the Arabs a greater military advantage in the event of another war. Likud is also more strongly against withdrawl in the West Bank or Golan Heights than is the Labor Alignment.

These positions are only official political platforms, however, and most Israeli politicians prefer to speak for themselves. In interviews last month, six members of the Knesset from five different parties spoke about the issue of war and peace and presented a collage of views on Israel's future.

* * *

Aviad Yafeh is an optimist. As party whip for Mapai, the foundation of the Rabin government, it is his duty to urge agreement on party issues. In the argumentative Knesset, this task requires an infinite reservoir of hope.

"I think Israel is stronger, more stable than last year," he says. "Some people are depressed because of the setback in 1973, but we still won the war. Of course, right now I see less chance of a complete cessation of hostilities in the very near future than I had hoped. Before 1973, we had been kidding ourselves about the immediate chances for peace.

"But before we can have peace," he continues, "the Arabs must change their attitudes about Israel. We want them to demilitarize the Sinai in return for our withdrawal. But even more important would be the deletion from Egyptian schoolbooks of those passages that call for the destruction of Israel. They should take out the parts in math books that ask. 'If you murdered three Israelis this morning, and murdered four Israelis in the afternoon, how many Israelis did you kill today?'

"I also don't think that the Arab states really believe the Palestinian problem is the crux of the Middle East crisis," Yafeh says. "They've never cared about the Palestinians. The whole refugee problem was caused by Arab aggression in 1947, and the Arab states have subsequently used the refugee camps as political weapons. It's sad, but as a result of that, people suffer.

"The Palestinians on the West Bank understand the problem." Yafeh continues. "Several years ago, when West Bank Palestinian leaders met with Prime Minister Eshkol, they said. 'Do you think Nasser or Hussein care about us? They care only about their careers. If there is another war, whoever wins, we will be the losers. Our two nations--Palestinians and Israelis--must coexist,' they continued. 'We have a lot of claims, but our two nations have to solve the problems ourselves.'"

Yafeh says he doesn't think Arafat "is the true Palestinian leader. Arafat only wants to fight against a peaceful solution," he says. "Palestinians who live here, on the other hand, are looking to live peacefully with us.

"Eventually, there may be a Palestinian state," Yafeh continues. "It would be on part of the West Bank and affiliated with Jordan. A completely independent Palestinian state on the West Bank just isn't viable--economically or politically. It would only be used as a springboard against Israel, and would never bring peace.

"For a real peace," he says. "I'd be willing to withdraw from a majority of the West Bank so they can make their own state in confederation with Jordan, where most of the Palestinians now live. Withdrawing from Jerusalem, of course, is out of the question, although the Arabs could have exterritorial rights for their holy sites.

"It may not be everything they want," says Yafeh, "but they must remember it's not everything we want either. We would be giving up land that belongs to us historically, biblically. We would not be giving up land that belongs to the Arabs, but rather, in the interest of peace. I am willing to amputate a part of my body in order to coexist with them."

* * *

Yossi Sarid, at 35, is one of the younger members of Mapai, and does not always agree with the party leadership. He moved last year from Tel Aviv to the northern development town of Kiryat Shmons where Arab terrorists had killed 28 men, women and children earlier in the year.

"I felt I had to do something, had to contribute more than I did before," he explains. "Also, when I was living in Tel Aviv between the Sheraton and Hilton hotels, it was harder to legitimately express my views on Israeli social problems."

Sarid says the social gap between Jews of European and non-European background is as important in Israel as foreign policy, but that defense needs almost always take precedence.

"I'm a dove on foreign policy," he says and I think the doves in the Labor Alignment represent the mainstream of the coalition.

"If the Arabs would be willing to sign a peace treaty," he says, then I'd be willing to withdraw from all the territories, with a few minor amendments. I believe there may soon be a breakthrough in negotiations with Egypt--I don't know about a peace treaty--and with Egypt, war is not possible in the Middle East.

"I also think," he adds, that in the very near future we will be obliged to talk with representatives of the Palestinians, that is to say, representatives of the Palestine Liberation Organization (PLO). I think Israel should say: If the PLO recognizes Israel's right to exist with secure borders, we will negotiate with them.

"I think Arafat represents the Palestinians," says Sarid, disagreeing with Yafeh. "There is no other leader who is able to represent them. Maybe right after the Six-Day War local Palestinian leaders could have arisen. But we did everything to prevent it, and now, even the other potential Palestinian leaders admit that Arafat and the PLO are the only true representatives.

"A Palestinian solution might involve a Palestinian state," he says. "I'm not advocating a separate state," he hastens to add, "but a kind of federation between Jordan and Palestinian territories. We can live side by side."

* * *

Ehud Olmert and Yoram Avidor are members of the hawkish opposition block, Likud. Olmert, at 29 the youngest Knesset member, belongs to the Free Center party and Avidor, 42, is a member of the somewhat more conservative Cherut party.

"I think the Israeli mood is more hawkish than ever before," says Olmert. "The Israeli people are peaceloving, but they feel they are left without a choice.

"Have you ever heard the Arabs even mention a peace treaty?" he asks. "No. This is the problem. We don't want to remain in Sinai for ever and ever, but the Arabs won't even agree not to attack us in return for our withdrawal from some of Sinai. Where is the peace here?"

"I don't think Egypt will give any political concessions," says Avidor. "Without a peace" treaty, why should we withdraw? Even then, I don't think we should withdraw from the Golan Heights or the West Bank.

"The problem is not withdrawal," he says. "The problem is the Arabs' unwillingness to recognize our existence. I think it's wrong that Rabin is willing to withdraw without a directly negotiated peace treaty.

"In any case," Avidor continues, "we should make a peace treaty only with states. We should not talk with the PLO which is a Nazi organization dedicated to the murder of Jews. They should be destroyed as enemies of the free world.

I also don't agree to the term "Palestinian Arabs," he says. "The Land of Israel is the correct name for what the Arabs call Palestine. The Arabs who are now in the Land of Israel can be rehabilitated have. Those refugees in Arab countries should be rehabilitated there."

"You can't talk about the Palestinians as a nation in the current sense of the word," says Olmert. "They don't have their own language, their own common history, their own culture.

"They are people who have begun to feel an identification with a certain cause," he says, but you certainly can't compare them to the Jewish people, the Jewish history and culture. Until 1967, they never even talked in terms of being a national entity.

"I think the Palestinian issue is a problem," Olmert admits, but it's not the primary one. The Arab countries, who haven't been able to reconcile our existence are using the Palestinians as a tool to fight Israel Before 1967, the Arabs had the borders they say they want us to return to now. So what's the problem in their eyes if not our very existence. If they were concerned about the Palestinians, why didn't they--the richest countries in the world--do something about it?

"We don't need to talk with the Palestinians, and certainly not with Arafat," says Olmert. "He's not their leader." The Palestinians already have a state and spokesman--Jordan. Let the Palestinians talk with Hussein and make an arrangement on the east bank of the Jordan for some sort of state.

"But Israel should keep the West Bank" says Olmert. "If the Palestinians want to solve any national aspirations they might have by creating a separate nation, this is not the place to do it."

* * *

Shulamit Aloni leads the new Citizens' Rights Party, whose social and political reform platform gave it enough voter appeal to gain three Knesset seats. "For 15 years," she says. "I was the only one in this country who fought for real human rights. I gave free legal aid. I wrote in newspapers about red tape in the bureaucracies and about constitutional rights."

Aloni left Rabin's Labor Alignment coalition last year, partly in protest over the inclusion of Mafdal in the coalition. "We have religious coercion that effects legislation," she says. "The religious community can worship however it wants, but it shouldn't force me to do the same in a secular state."

Aloni's views on the Arab-Israeli conflict are equally vehement. "I think we're strong enough to risk some steps towards peace," she says. "Everything, including Jerusalem, should be negotiated. We didn't negotiate earlier, with Jordan, for example, because we thought we could postpone the decision. The government listened to the right wing too much too often.

"We must also consider the Palestinian problem," she says. "It's a problem because they exist 2,800,000 Palestinians. They declare that they are one entity. It's for them to define, not me. I don't believe in patronizing other groups. They have been living here said that's a fact. The problem is that there are two entities two nations who have claim to this country.

"Even if the Arab states seeming concern for the Palestinians is an excuse what of it?" she asks. "Why should we play their game? There may be many reasons for the Arab war against Israel. But the whole world thinks it's because of the Palestinians. So let's say, o.k., let's solve the problem. At the very least, we'll leave the ball in their court.

"As for the PLO." Aloni continues, "how can we negotiate with them if they can't recognize Israel? Arafat says he wants a democratic secular state in this land. Well, there is a democratic secular state here and its name is Israel. The moment the PLO is ready to put away their guns and recognize that Israel exists, then we can negotiate with them."

* * *

Zerach Warhaftig belongs to Maldal and has served as minister for religious affairs. He is active in the party leadership and has little time for interviews.

A follower of the "Whole Israel Movement," he believes in the extension of Israel to its biblical borders, which include the West Bank. "Historically and religiously," he says, "the Land of Israel is one entity, However." He continues "I might be willing to compromise" on territories for a real peace. And certainly, in the Sinai and Golan Heights, it's more a question of security, the more real peace the Arabs want, the more territories we can return.

"As for the Palestinians," he says. "There is no separate Palestinian nationalism, but only Arab nationalism. Ever since the Jews were expelled from the Land of Israel, there has been no Palestinian entity. Arab nationalism, on the other hand, should be satisfied with 20 states. They don't need another one.

"There is a problem with refugees Warhaftig admits, "but it's a small problem. Israel has absorbed hundreds of thousands of Jewish refugees from Arab countries. If the Arab states wanted to, they could absorb their own refugees easily enough."

* * *

Israel knows the status quo cannot continue indefinitely. The Arab states are militarily stronger than they were in 1967 and have learned to use oil politics to isolate Israel from the world community. Israel knows it must rely on the United States for political, economic and military aid. But America is not impervious to Arab oil pressure and the Ford administration is demanding Israeli territorial concessions.

Most Israelis concede that withdrawal from the administered territories is inevitable but few agree on the prerequisite Arab concessions, the extent of withdrawals to bargain. So the arguments continue and the Knessetchamber reverberates with shouts of morals outrage, ideological indignation and occasional insults.

But there is always something uniquely Israeli about the nature of these debates obvious in one heated discussion reported last month in the Israeli press.

The disagreement concerned Naftali Feder a left wing member of the Labor Alignment who had spoken with a PLO delegate who had approached him in a restaurant in Geneva.

A Likud spokesman blasted the Alignment member for his tacit recognition of the PLO, whom terrorist he said, were responsible for murdering members of Kibbutz Shamir.

An Alignment member, referring to the Kibbutz movement's generally leftist ideological stance. "How can you, you tell us about Kibbutz Shamir. All honor to this Kibbutz movement. How do you dare talk like that!"

The Likud member accused the left wing of the Labor Alignment of being subservient to every left wing movement in the world.

The Alignment member shouted that his party had built more kibbutzim in Israel than Likud.

The clamor continued until one member of a religious party remarked. "None of this would have happened if only Feder had gone to eat at a kosher restaurant in Geneva."SHULAMIT ALONI: "We're strong enough to risk some steps towards peace."