IN A CONVERSION as dramatic as that of Paul on the road to Damascus, Jimmy Carter has finally seen The Truth. Or so one would believe after watching the network news and reading almost any paper over the past few weeks of jingoistic self-flagellation. As ABC's "America Held Hostage" approaches its milestone Day 100, the nightly special seems more and more like the film clips Grumman Aircraft makes for the Pentagon.

Carter "has wrapped himself in the American flag, draft registration, and the politics of the cold war," as Alexander Cockburn and James Ridgeway of The Village Voice wrote last week. He has understandably--in the context of the American political system--channeled the confusion to advance his reelection prospects, incapacitating his opponents by playing the "Rose Garden Strategy" and acting "presidential" to perfection. The nationalism has been all-consuming; Americans have forgotten about banalities such as inflation. As The New Republic put it:

...the mullah and the mob have provided Jimmy Carter, vicar of Satan in their eyes, with a smokescreen for all the failures of his presidency: inflation, energy policy, the increasing desperation of the poor, tax reform, an urban housing short-age, declining productivity.

Arming the Persian Gulf region's monarchs with more weapons than they have soldiers to fire them may be the most politically appealing strategem, but it is probably the most ineffective way to safeguard American interests. Carter has termed the area "vital" to the security of the United States, vowing to protect it militarily, along with Western Europe and Japan. However, no number of American troops can maintain stability in the face of the resurgence of Moslem fundamentalism and the psychological dislocation of modernization.

Blatant Soviet aggression is not likely to be the source of any instability in the near future. The importance of the Gulf region to the West has long been implicit in American policy; the Soviets did not need presidential envoy Clark Clifford in New Delhi or Carter in Washington to say so. The new, "hawkish" leaders in the Kremlin (if indeed they have taken over from the doddering Brezhnev) must realize that further military moves in the area would court a global conflict. Even Henry Kissinger recognizes that the Soviets, no matter how devious they are, will hesitate before taking any new military action, and more likely will follow their armed offensive with a "peace offensive" to repair their image.

The recent take-over of the mosque in Mecca--now known to be a well-organized attempt by Moslem fundamentalists to overthrow the Saudi leadership and not the isolated work of Shiite fanatics--showed that instability in the region is more likely to stem from domestic political unrest them from foreign intervention.

The same grandiose economic plans and spending that tore apart Iranian society and drove the Shah from power now threaten other conservative societies in the Persian Gulf. These oil-producing states have spent most of their revenues on the ambitious development of petrochemical and other heavy, "prestige" industries, to the neglect of traditional economic activities, like fishing, agriculture and cattle-raising, which would distribute oil wealth more widely. As an article in The New York Times recently noted, "with that neglect came the disruption of the lifestyle of large segments of the population, particularly of the Bedouins, who are the backbone of the gulf populations." Moreover, the Saudis and Kuwaitis attending school in the Cambridges on both sides of the Atlantic are returning to find that, though they have the best educations that money will buy, their governments will not allow them to participate in decision-making. Much of the recent surge in gold prices stems from insecure Persian Gulf monarchs on buying sprees, who, realizing their reigns will end soon, would rather retire in King Farouk-like opulence.

In the face of domestic upheaval in the region, the key foreign policy question for America is not the absence of military power but its impotence. America's experience in Vietnam attests to the efficacy of foreign intervention in a popular insurrection. In fact, a more visible American military presence in the Persian Gulf would only associate friendly monarchs even more closely with a Westernizing United States, at a time when they are frantically seeking to dissociate themselves from it instead.

Moreover, radicals could counter any American military action by mining the narrow Straits of Hormuz, through which practically all of the Persian Gulf oil flows to the West. While two or three burning oil tankers in the waterway would be a fiery spectacle for American television viewer, it would not be a pretty sight for Western policymakers. Although many American hearts would pound at the sight of our boys jumping off helicopters onto the Arabian sands, emotions don't light homes.

IRONICALLY, CARTER has resorted to flag-waving in order to hide his domestic failures, when solutions to these very problems--particularly that of energy--would best cure America's foreign policy headaches in the Persian Gulf. The region is a vital American interest only because American greed has made it so. To impose an emergency energy plan, complete with gasoline rationing, would be a far stronger policy than to reinstitute draft registration.

An effective energy program must hurt, and it seems that the only presidential candidate who understands this fact of life is Rep. John Anderson (R-Ill.), who has proposed a 50-cent tax on gasoline. Carter's aides have admitted to reporters that the country would undoubtedly be better off in a few years if the president imposed a hefty gasoline tax; however, they say he can't because of "political" considerations. Carter has opted for a World War II-style rearmament drive that will only accelerate inflation. He could just as easily have channeled the spasm of popular support that started with the taking of the American hostages in Tehran and has continued through the Soviet invasion of Afghanistan into a crash conservation program.

In the 1970s, securing energy supplies emerged alongside checking Soviet expansionism as one of the overriding goals of American foreign policy. While a strong military may be the only way to deal with the Soviets, tanks and paratroopers are certainly not a cheap or effective way to guarantee America's energy security.