FIRST, THE GOOD NEWS: After 70 years of rejectionism, obstinance, deadlock, and war between Arabs and Jews in the Middle East, a multilateral peace conference has arrived.

Now, the better news: Real progress is more likely than many of the naysayers are naysaying.

And now, the bad news: Don't hold your breath.

EVEN IF wildly successful, the Madrid conference slated to begin tonight will have no effect on most of the conflicts that are lumped together as the Middle East problem. Lebanese Christians and Muslims will continue to kill each other. Religious fundamentalism will roll merrily along. Unrest, if not war, will mark the Maghreb. Iraq will still threaten any country within Scud range. Tens of millions of people from Damascus to Cairo to Tunis and beyond will be poor, illiterate and politically suppressed.

Israel, Syria, and the PLO are not going to sit down...

The subject of the current conference, the Arab-Israel conflict, is only one dimension of the region's problem. It is not even the essence of the Middle East problem, despite the claims of many who traffic in scapegoats and easy answers.

It is, nevertheless, a problem worth solving. If the leaders of Syria, Jordan and the Palestians actually speak with Israeli Prime Minister Yitzhak Shamir tonight, a minor miracle in itself, solutions may be nearer than they have been in a long time.

Peace, however, is not at hand. International conflicts are settled out of necessity and good will, and good will is strikingly absent from this gathering. Fourteen years ago, Egyptian President Anwar Sadat made Israelis believe that his attitude toward them had changed by flying to Jerusalem and shaking hands with Israelis, smiling all the time. In contrast, rumors now fly that Syrian President Hafez al-Assad will refuse to shake Shamir's hand, (in Madrid--forget Jerusalem) and such a refusal is unlikely to evoke sympathy from Shamir, who has promised his electorate that he will not cede real estate for promises of peace.

Whether the Palestinian delegation brings good will is harder to know. Assad is a dictator. Listen to him and hear the Syrian line. The Palestinians, however, bring a fragmented team to Madrid. Some, like newspaper editor Sari Nussiebah, say that the conference is less an opportunity to talk with the Israelis than a chance to rally the world against Israel. Other members of the Palestinian team declare in almost every public forum that they represent the Palestine Liberation Organization (PLO), knowing that Israel has promised to abandon the conference if the PLO participates.

Everyone, including Shamir, knows that the PLO will pull the Palestinian strings. Madrid just happens to host Europe's largest PLO offices. A special liaison has been established to keep the fax lines humming between the official negotiators and PLO chairman Yasser Arafat. But Israel has opted to pretend to believe the charade of PLO noninvolvement. That way, talks can have their chance. Whether or not Israel's refusal to deal with the PLO is reasonable, Palestianian negotiators who openly attempt to bury that charade jeopardize the chance for real talks.

Shamir, for his part, has voiced little affection for the Arab parties. His prevailing posture is that he will make no concessions. That leaves little room for successful negotiations. He claims that Israel's right to exist is not a bargaining chip and that Israel should not be expected to forfeit territory, which is real, for promises that it will be left alone, which are just talk. Whether or not his position is reasonable, declarations of inflexibility are unlikely to warm the attitudes of his opposite numbers.

Gloomy forecasts, usually featuring short screaming matches and everyone going home, thus might seem more plausible than any reconciliation. The Israeli newspaper Ha'aretz quipped last Friday that Israelis were divided into two camps about the conference: one skeptical and one pessimistic.

THE NEWS, however, is not all bad. Faisal al-Husseini, the real Palestinian mover in Madrid, earnestly tries to squash the PLO-yelping delegates, hoping to keep the conference on course. Arafat's announcement that he will abide by whatever the Palestinian negotiators agree to is equally encouraging. Arafat has nothing to worry about, of course, because he will be telling the Palestinian team what to say. But at long last, he has decided to play the game that might make peace possible instead of allowing ideology and extremism to snatch despair from the jaws of hope.

Shamir, for his part, shows two helpful signs. First, he consents to be the dupe who doesn't see the PLO where it most obviously is. Second, his decision to attend the conference in person suggests that he is serious about negotiating.

Clyde Haberman's prattling in The New York Times that Shamir, a hard-liner, blocks progress by attending the conference in place of his more moderate foreign minister, David Levy, is probably (not to say characteristically) a misreading. If Levy headed the Israeli delegation, any concessions he made would be subject to fierce resistance in Jerusalem. Only Shamir can make real concessions stick. Perhaps--just perhaps--he is putting himself in place to do so.