rime Minister Ariel Sharon of Israel has every right to respond swiftly and firmly to Palestinian terrorist outrages. But when his actions undermine the prospects for better Palestinian governing and an eventual end to the violence, neither Israel's interests nor America's are well served. Mr. Sharon unwisely decided on Monday to bar Palestinian delegates from attending a meeting in London next week that Britain's prime minister, Tony Blair, hoped would encourage internal Palestinian reform. Secretary of State Colin L. Powell is right to urge Mr. Sharon to reconsider.

Primary responsibility for the cycle of terror and reprisal that has paralyzed Mideast peace efforts for the past two years lies with the fanatical Palestinian groups that organize suicide bombings and weak Palestinian leaders like Yasir Arafat who fail to crack down on them. Still, Israel cannot afford to let the most radical Palestinians drive the Mideast agenda. To do so is to advance the aims of such groups by destroying chances for a compromise peace and easing pressure for a more responsible Palestinian leadership capable of negotiating one. Israel's goal should be to marginalize Palestinian terrorists, not to advance their cause.

The London conference was planned to promote better Palestinian governing and more effective security measures against terrorists. Two Palestinian cabinet ministers were scheduled to attend, including Salam Fayad, who, since his appointment last year as finance minister, has introduced a greater measure of accountability into the Palestinian Authority's financial operations. With Washington preoccupied by Iraq, Mr. Blair has constructively tried to sustain some momentum toward Palestinian reform and an eventual renewal of peace negotiations. By preventing Palestinians from attending the London meeting, Mr. Sharon has effectively undermined the Blair initiative.

Israel's military response to the latest twin suicide bombing, which killed 23 people in Tel Aviv on Sunday, has so far been restrained. But Israel should also reinforce international efforts to encourage reform and moderation among the Palestinian leadership. If Israel and the Palestinians are ever to make their way back to the negotiating table, both camps will have to look beyond the daily bloodshed to the longer-term welfare of their peoples. Israel can do just that by letting Palestinian representatives attend the London meeting.