Dribble diplomacy is alive and well as the Israelis topped the Soviet army team in a basketball contest that had more significance off court.

While China had its spell of ping-pong diplomacy in the 1970s when it decided to warm up to the West, the Jewish state and the Soviet Union now seem to be improving relations.At the army sports complex on Moscow's west side, Maccabi of Tel Aviv held on to beat the Soviet army 97-92, to the joyful shouts of hundreds of Soviet Jews who had the rare opportunity to wave an Israeli flag and proclaim their ancient heritage.

In Israel, it was estimated that more than 2 million of the 4.2 million people followed the game in the first live broadcast from Moscow. Maccabi held a 71-51 lead with 12 minutes to play, but the Soviet team stormed back to within 93-89 on the play of guard Vladimir Gorin and forward Sergei Tarakanov.

Rush-hour traffic in major Israeli cities was cut to a trickle as people sped home early to watch the game. Israelis gathered in pizzerias and cafes to watch. Jerusalem's central Mahane Yehuda market closed three hours early.

Israeli Prime Minister Yitzhak Shamir, not known as a sports buff, viewed

the game on a small portable TV set in his office.

After Ken Barlow, one of four native American players on the Israeli team, wrapped up the game for Maccabi with a short jump shot as the clock wound down, fans rushed into the streets in Israel, shouting "We won, we won!" Bus and taxi drivers honked their horns.

Inside the stadium, Soviet Jews hugged and kissed each other.

"This is joy, this is happiness," crowed Merab Detrokalashuvili, a 38-year-old Jew from the Soviet Georgian republic. "The Jewish nation is one nation."

On the court, the pace had been hectic but with nary an incident, Maccabi captain Doron Jamshi and coach Zvi Sherf said. Nor was any disturbance reported in the stands or outside.

"Relations are very good," a pleased Jamshi said. "It's like a little war. We won and go home happy."

The team's appearance in Moscow for a European Championship Cup game was the first by an Israeli team in 15 years. The Soviet team will go to Israel for a rematch in March.

It was the first Soviet appearance by an Israeli basketball team since Israeli participants in the University Games were jeered as they walked into Lenin Stadium in August 1973.

The Kremlin severed relations with Israel following the 1967 Mideast War and it has been only in recent years, under Mikhail Gorbachev, that Soviet-Israeli relations have shown signs of improving.

The visit of Soviet musicians, a leading poet and ordinary Soviet tourists to Israel have helped. Cultural visits are particularly popular, partly because Israel has 250,000 immigrants from the Soviet Union.

Foreign Minister Moshe Arens of Israel said the drawing closer of the two nations is motivated by Soviet desire to play a role in any Mideast peace talks and the need to convince Israel such a role can be constructive.

But for basketball-crazy Israel and for Soviet Jews chanting "Maccabi, Maccabi!" in the stadium and waving blue-and-white banners bearing the Star of David, the game was a joy just in itself.

Especially that final score, 97-92.