OPERATION SHYLOCK By Philip Roth (Jonathan Cape, $195) PHILIP Roth, the author of Portnoy's Complaint has finally decided to write a novel about what appears to be his favourite subject: Philip Roth. There is, of course, nothing wrong with novelists writing about themselves or basing their stories on their own experiences. Indeed the world stock of literature would be severely depleted were this not the case. Mr Roth's problem is that he does it withsuch a severe lack of modesty. He misses few opportunities to remind the reader that he is a very important literary personality, admired as the author of Portnoy's Complaint, married to the famous actress Claire Bloom and much in demand around the world. His fame established, this ludicrous book then embarks on the bizarre story of an impersonator buzzing round the world impersonating the ever-so famous Philip Roth. He even arranges a meeting with President Lech Walesa of Poland on the strength of being the American author. Mr Roth then travels to Israel for a number of reasons: he is in pursuit of his impersonator; he has to interview the Israeli author Aharon Appelfeld for The New York Times; and to observe the trial of the alleged Ukrainian concentration camp murderer John Demjanjuk. Are you confused? Well spare a thought for this reviewer who had to plough through 398 pages of confusion. As the story progresses confusion gives way to total absurdity as we learn that most or maybe some of the above was really an elaborate plot to lure the famous Philip Roth to work for the Israeli secret service. The idea was to manipulate him into a position where he would meet Yasser Arafat, the Palestine Liberation Organisation leader, who would then reveal the names of Jews who were supporting his merry band of ''terrorists''. The reader is expected to believe that the real reason for the PLO's success is the presence of its Jewish backers. Even in a book cram packed with absurdities, this is a rather difficult notion to swallow whole. Mr Roth, who constantly reminds us that he is both shrewd and cynical in dispassionately examining the question dividing Israelis and Palestinians, gives not the slightest indication that he finds anything strange about this idea. He then proceeds to add insult to injury by providing a contradictory and meandering explanation of why he will not reveal what happened during his mission to see the great man; nor does he reveal whether or not he saw him. The key to this sudden outbreak of discretion lies in the persuasive powers of Mr Roth's recruiter who allegedly has retired from the secret service and makes a special personal visit to the United States to plead with the author to withhold details of his mission. Apparently he makes no objection to the idea of writing the story of how Philip Roth got involved in the plot. Is this book being harshly judged by some misguided obsession with journalistic accuracy? After all the shelves are full of so called ''faction'' where fact and fiction uncomfortably share the same bed, jostling for position and constantly displacing thesheets which are supposed to provide a neat covering. Operation Shylock may well be faction. In a final note to the reader Mr Roth, in what he no doubt regards as a master stroke, tells us that some parts of his reproduced interview with Mr Appelfeld are true, as are the verbatim minutes of the Demjanjuk trial. However everything else is a product ''of the author's imagination . . . Any resemblance to actual events or locales or persons living or dead, is entirely coincidental''. Then comes the piece de resistance: ''This confession is false.'' Wow, there's suspense for you. Have I had sleepless nights wondering about the veracity of the last statement? In truth, no. However, I have often wondered why Mr Roth did not follow his own advice, contained on page 215 of this opus. He has just rid himself of his impersonator and the impersonator's girl friend (whom he has come to know in the biblical sense) and is looking forward to his escape. '' Don't write about it afterwards, I told myself. Even the gullible now have contempt for the idea of objectivity; the latest thing they've swallowed whole is that it's impossible to report anything faithfully other than one's own temperature; everything is allegory - so what possible chance would I have to persuade anyone of a reality like this one?'' None whatsoever, Mr Roth. You are, in this at least, absolutely right.