During the past 40 years, several generations of American children have grown up with the Nation of Israel as a historical reality. Whether Jewish or Gentile, juvenile readers have absorbed a version of the story that recapitulates in modern dress the biblical story of the children of Hagar and Sarah, reinforced by American attitudes toward people of color and non-western cultures. Because children are strongly affected by what they read and hear, an examination of the image of the Arab in American children's fiction may illuminate attitudes which have prevented American Jews and non-Jews from seeing Palestinians as human beings. The image of Arabs as brutal terrorists pervades even those children's books that depict friendships between Arab and Israeli children. In many of these novels, the apparent contradiction between images of Arabs as both potential friends and potential enemies is resolved, or skirted, by means of the distinction made between local villagers who have made peace with Israeli settlers and Arabs from over the border who make trouble. Beneath the often facile pleas for peace are the same assumptions that have blocked Arab-Israeli reconciliation for over 40 years: the assumption that the Israeli enterprise is the only one that matters in the Middle East, and that those Arabs who do not support it wholeheartedly are terrorists, monsters, or worse. (Eighteen references are attached.) (RS)