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THE UNITED STATES took a difficult but proper step when it joined the United Nations Security Council in criticizing Israel's treatment of the Palestinians in the occupied lands.

The unanimous U.N. action was taken in response to the recent deportation of four Palestinians in the wake of the rioting at Jerusalem's Temple Mount and subsequent stabbing deaths.

But with many Arab nations lined up with the United States in confronting Iraq, the issues have taken on more than usual significance. Israel and some U.S. Jewish groups reacted emotionally to the U.N. action, accusing the United States of trying to appease its Arab allies in the Persian Gulf.

This accusation is unfair, since the U.N. resolution is in basic agreement with past American policy. The United States has repeatedly and consistently criticized Israel for its misguided policy in the occupied territories.

Israel has resisted negotiations for the return of the Arab land, seized in the 1967 war, and has even pressed forward with ambitious plans to encourage new Jewish settlements there.

The U.N. resolution, as passed, was considerably toned down through strenuous American diplomatic efforts. The United States particularly wanted to avoid linking the Iraqi occupation of Kuwait to the Israeli occupation of the Arab lands. The two issues are significantly different: Israel was attacked in the 1967 war and occupied the territories while fighting back. Iraq does not deserve to succeed in blurring the differences. Yet, obviously, as long as the Palestinian land remains occupied, the opportunity for this obfuscation exists.

For the first time, the Security Council endorsed the idea of an international peace conference on Arab-Israeli issues -- something sought by Iraq -- but this was done in a statement that was separate from the resolution and included the declaration that the Arab-Israeli conflict was "unique" and "must be addressed independently, on its own merits."

The United States successfully maneuvered through many cross-currents to fashion the final resolution. Yemen and others would have preferred a more radical resolution that the United States would have been forced to veto. An American veto, siding with Israel, would have embarrassed our Arab partners in the Persian Gulf and threatened to break up the alliance.

Iraq's aggression is the immediate threat to peace in the Middle East, but Israel's policy of expansion has long been a source of Arab-Israeli enmity, fostering extremism on both sides.

The U.N. call for an international conference set no timetable, and it shouldn't have under the present strained circumstances in the Middle East. But the U.N. statement should serve notice on the expansionist elements in Israel that they must give up the idea of a "greater Israel" and start to think in terms of a realistic peace settlement with Arab neighbors.

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