ISRAEL cannot forge a peace in the Middle East based on trust.

Although Palestine Liberation Organization leader Yassir Arafat has notably moderated his language in the last few months, his movement has yet to overcome its words and deeds that reject peace. Its leaders continue to make statements that half conceal a determination to strike at the security of Israel. There can be no trust.

Arafat's new tone is indeed remarkable. His achievement thus far--meeting America's conditions for negotiation--was a crucial first step toward settlement. Nevertheless, America set those preconditions so it could deal with the PLO; this was not a pledge to accommodate the PLO. A number of key issues justify skepticism in the PLO before anyone can embrace its proposal to comandeer a Palestinian state.

ARAFAT has never explicitly recognized Israel. His words dance around the United Nations resolutions that include recognition of Israel. Take, for example his Geneva proposal for "a comprehensive settlement...including the state of Palestine, Israel and other neighbors, within the framework of the international conference for peace in the Middle East on the basis of Resolutions 242 and 338 and so as to guarantee equality...and respect the right to exist in peace and security for all."

Asked at a news conference--yes or no--whether he had just recognized Israel, Arafat dismissed the query by saying, "Didn't you read my statement? Read it. It's clear."

Unless Arafat explicitly recogizes Israel, he can always turn around and say that he never did, when it suits his cause, say, after a Palestian state has been achieved.

If "it's clear" that Arafat recognizes Israel, then why won't he say it? There are several reasons: one, he doesn't mean it; two, he wants to leave open the possibility to change what he means; three, he fears a violent reaction from his Palestinian opposition. All three reasons are plausible. Israel should not be expected to cede one-third of its territory--located a dozen miles from its most populous areas--on the basis of such unclear promises.

ARAFAT'S refusal to clearly recognize Israel makes sense in light of his (and his organization's) past statements. They all indicate what Tel Aviv analyst Asher Susser calls a "strategy of phases," in which the Palestinian liberation movement aims to take control of Israel bit by bit.

In 1980, the PLO representative in Saudi Arabia said, "On no account will the Palestinians accept part of Palestine and call it the Palestinian state, while forfeiting the remaining areas which are called the State of Israel." Arafat keyed in, "The victory march will continue until the Palestinian flag flies in Jerusalem and all of Palestine--from the Jordan River to the Mediterranean Sea." In another speech, Arafat proclaimed, "We shall not rest until the day when we return to our home, and until we destroy Israel."

In 1983 the message was the same. "Our rights extend beyond the West Bank and Gaza," said the head of the PLO political section.

That the Palestinians will accept a state only as a stage toward the eventual control of Israel has been confirmed by PLO statements made after Arafat's recent initiatives. Arafat's deputy, Saleh' Khalef, recently told a Kuwaiti newspaper, "the establishment of a Palestininan state in any part of Palestine has as its goal the establishment of a Palestinian state in all of Palestine." The chairman of the Palestinian National Council, Sheikh Abdul Hanid el Haya, agreed, "We should take and then demand more."

An Israeli cartoon commercial in this year's elections showed a Pac Man character chomping away at the occupied territories, then continuing to gobble the entire land of Israel. These fears are exaggerated, but unfortunately all too fitting with the Palestinian rhetoric.

HISTORY provides another key indication that Palestinian desire for a state reaches beyond the occupied territories. If not for the intransigence of the Arabs in the past 41 years, the question of a Palestinian state would be moot. There would be one.

In 1948 Israel accepted a U.N. plan to partition Palestine, which would make an Arab state out of a much larger area than is now encompassed by the occupied territories. The Palestinians fought the partition; according to U.N. Secretary General Trygve Lie, "the Arabs repeatedly had asserted that they would resist partition by force." A Palestinian spokesperson called the partition "a line of fire and blood."

The West Bank and Gaza were under Arab control from 1948 until 1967; still no Palestinian state was demanded or created. When Palestinian leaders called for liberating Palestine (the PLO was founded in 1964 doing just that), they were talking about eradicating the entire state of Israel.