JERUSALEM (AP) _ The Arab-Israeli conflict passes a milestone Thursday: Nineteen years ago Israel began its troubled occupation of the West Bank of the Jordan River, an area earlier ruled for 19 uneasy years by the Kingdom of Jordan.

The anniversary marks the start of the 1967 Six-Day War on June 5. With the hindsight of nearly two decades, the war now emerges as a watershed for both the politics of the region and its peoples.

The conflict prompted the first real effort to find a negotiated settlement based on U.N. Security Council Resolution 242 of 1967. That document contains the land-for-peace formula that has been the cornerstone of all subsequent peace efforts.

But the war also fostered extremism among both Arabs and Jews, giving rise to the attacks by Palestinian guerrillas and the radical Jewish nationalism of the Gush Emunim (Bloc of Faithful) settler movement.

At the end of the war, Israelis rejoiced at their seemingly miraculous deliverance from imminent destruction. Now, the anniversary is celebrated with marches and flag-waving rallies as ''Jerusalem Day,'' to mark the reuniting of the holy city under Jewish rule.

Palestinians have frequently conducted protest demonstrations on June 5.

But many Palestinians who complain of repression under Israeli occupation also remember the years under Jordanian King Hussein's rule with equal distaste. Demonstrations, curfews, and mass arrests were common to rule by both countries.

''There was always a mistrust between Hussein and the people that still exists,'' said Ibrahim Karaeen, 39-year-old owner of the weekly Al Awda (the Return) magazine. ''If Jordan came back today it would also be viewed as an occupier.''

''The dangers we face from Israel today are different. The Israelis take our land and our rights,'' he said.

The West Bank is 2,270 square miles of varied landscape: fertile mountains tumbling into the barreness of the Judean desert and the rocky Jordan River Valley.

It is home for 800,000 Palestinians and 50,000 Jews. Israelis live in more than 100 settlements, most built in the past decade by right-wing governments wanting to stake out the land as Israel's own.

Until 1948, the West Bank was part of the Palestinian mandate given to Britain by the League of Nations. The first Arab-Israeli war ended with Jordan in control of the territory, which it annexed in 1950. Only Britain and Pakistan recognized Jordan's claim.

Israel annexed Arab east Jerusalem in 1967 and affirmed the reunified city as its eternal capital in 1980. The Golan Heights, seized from Syria, was annexed in 1981, but the government has officially left open the status of the West Bank and Gaza Strip.

Israel's sweeping victory ultimately changed the nature of the Middle East conflict from an argument over the Jewish state's existence to a dispute over its borders and the terms of peace.

The occupation has troubled Israelis. Opinion polls and elections since 1977 show the public almost evenly divided on whether Israel should bargain away any of the West Bank for peace.

The division is reflected in Israel's coalition government, which grew out of the stalemated 1984 elections.

Nationalists of Foreign Minister Yitzhak Shamir's Likud Bloc, contend the West Bank is part of Israel's biblical birthright and that their claim is reinforced by the dictates of security.

Prime Minister Shimon Peres' left-of-center Labor Party argues that some land must be traded away to prevent the shrinking Jewish majority from being overwhelmed by the burgeoning Arab population.

Jews outnumber Arabs by 3.5 million to 2.2 million in Israel and the occupied territories together. Forecasts based on official figures suggest the balance may approach 50-50 within a few decades.

Meir Pail, a military historian at Tel Aviv University and a leftist, said continuing the occupation ultimately will lead to a South Africa-type situation where a minority rules a majority.

''I give it to the end of the 20th century. If we don't start making peace with our neighbors by the end of the century there is a real danger that Zionism will fade away,'' he said in an interview.

While Israel became internally divided, the Palestinians rallied around guerrilla chief Yasser Arafat. Karaeen said that before 1967 ''no one would speak of the narrow issue of nationalism. A Palestinian state was not the issue. We were part of the greater Arab nation.''

But the war created a Palestinian identity. ''It made us realize that we must forget the Arab states. No one is going to help us.''