Israel's new right-wing coalition government has such a small margin of power - two votes in a 120-seat parliament - that it cannot afford to make mistakes. Yet only days into its first week in office, it has outraged Arab neighbors, offended other nations and put Israel on a collision course with the United States.

Prime Minister Yitzhak Shamir promised earlier this week to soften the rhetoric about Jewish settlements in the occupied territories, to make peace a top priority and to convince Arab enemies that he is not a "monster seeking war." Those fine sentiments lasted barely 24 hours.On the new government's first working day, officials said the government would spend more money on Jewish settlements in occupied lands, would not promise to prevent Soviet Jews from settling in those lands and may consider deporting leaders of the Palestinian uprising.

All of those policies have been strongly opposed by the United States, its Western allies, the Soviet Union and, of course, neighboring Arab states.

In fact, Mikhail Gorbachev has threatened to cut off the emigration of Soviet Jews if they are to be settled in occupied territories held by Israel. President Bush argued against that Soviet step, but if Israel continues to ignore world opinion, it will make things extremely difficult for the United States to be a strong defender and backer of the country.

Israel's attitude, as expressed this week by Ariel Sharon, a hard-liner in the new Cabinet, is that Israel is a democracy and could not tell its citizens where to live. That is simply avoiding the issue. Democracy or not, Israel can control who settles in the occupied territories, which legally are not part of the Israeli nation.

Unless Israel's new right-wing leadership alters its rhetoric and actions, the chances for peace in the Middle East will grow increasingly dim. Defiance is not going to convince already suspicious Arabs about Israel's desire for peace.

And the United States, which keeps Israel afloat financially - and pays the price by being hated by many Arabs - cannot afford to continue to underwrite intransigent behavior that only makes things worse.

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