At the height of the most recent U.S.-Iraq crisis last month, Palestinian students marched through various cities of the West Bank and Gaza, burning American and Israeli flags and chanting "Beloved Saddam, destroy Tel Aviv" and "Powerful Saddam, strike with chemical weapons."

We Americans are largely inured to the loathsome depths of the anti-American and anti-Israel agitation among the Palestinians. But these demonstrations must not pass unremarked. When the elite of Palestinian youth call for the mass murder of Jews - by gassing, no less - attention must be paid.This cannot be dismissed as the expression of a few extremists. According to the Palestinians' own polls, 77 percent of all Palestinians on the West Bank and Gaza support Saddam attacking Israel with missiles in the event of an American attack on Iraq.

And considering what the dictatorship run by Yasser Arafat teaches in the schools and through the controlled press, what can you expect? Consider this from Al-Hayat Al-Jadida, the official newspaper of Arafat's Palestinian Authority, on the subject of "plots of aggression against Iraq and Palestine": "Netanyahu's face clings to Clinton's, and in between are people like Dennis Ross, Martin Indyk, Albright and Cohen who are all - surprise, surprise - Zionist Jews." (Referring to U.S. negotiator Ross, Assistant Secretary of State Indyk, Secretary of State Madeleine Albright and Secretary of Defense William Cohen.) It would be hard to concoct a sentence that contains a slimier mixture of anti-American and anti-Semitic caricatures.

The article, however, goes on to do exactly that. It draws, for example, the larger lesson on the nature of the Jews: " . . . a fraction of humankind - perceiving themselves to be of unique descent chosen by Allah to rule the world - spell doom for all nations on earth, emanating from (their) superiority complex, a complex of the new Nazism and the new racist Aryan race."

This staple PLO teaching - Jews as Nazis - is followed by a history lesson: "This spells doom for the U.S. itself, as was exhorted by the American President Benjamin Franklin (sic) who . . . claimed that if Jews were permitted entry into the U.S., they would take over the country's resources within a hundred years and . . . tyrannize the American people who would become subservient to them. . . . Doesn't the American administration embody Frank-lin's prophecy these days?" (This old and vicious forgery appeared in 1935 in German in the Nazis' "Handbook on the Jewish Question.")

Why is this revolting propaganda important? Because the central idea of the Oslo accords was step-by-step reconciliation between Arab and Jew: Israel would gradually give back territory, testing as it went the sincerity of Palestinian pledges to peace and coexistence.

Israel has accordingly made three extremely significant withdrawals. As a result, the occupation is over: 98 percent of Palestinians in the West Bank and Gaza live under Arafat. And what do Israelis find on the other side? That Arafat has raised a generation so thoroughly schooled in hatred of "Judeo-Nazis" - infiltrating, controlling and dooming the world - that it calls openly for genocide.

Some coexistence, some peace. Just last month, in fact, Arafat threatened to "cross out" Oslo and begin the violence all over again.

What, then, is the U.S. administration's plan for rescuing a peace process so subverted by PLO hate- and war-mongering? Pressure Israel, of course. In what has now become a reflexive response - get humbled by Iraq, turn on Israel - the State Department is considering giving Israel an ultimatum to make a fourth territorial withdrawal in return for yet another round of Arafat promises (to cease anti-Israel propaganda, to embrace nonviolence, to change the Palestinian Charter calling for the extermination of Israel, etc., etc.).

Netanyahu and his government are rightly prepared to say no. They are willing to make a fourth withdrawal, but only after Arafat delivers on the promises he made the first three times.

Moreover, Netanyahu is prepared to make a final settlement with Arafat, involving a final Israeli withdrawal, in return for a final peace and final borders. Arafat is resisting making such a deal. Why? He prefers to get the land for free. How? Let Albright deliver Israel. Let her pressure Netanyahu into another land-for-nothing deal.

Which is where Clinton comes in. He can override the State Department's instincts and send Arafat a message: Land for peace, not land for empty air. We will not deliver Israel; only you can do that. You can get your state, your flag, your independence, but only by making a deal directly with Israel and living up to your commitments. You might start by teaching your young that the gassing of Jews is something not to be cheered.