THE PALESTINIAN protests that have rocked Gaza, the West Bank, and Israel in recent weeks have brought ugly pictures to our television screens. But for two main reasons, they hold out some hope that peace may come to the Holy Land sooner than most American think:

The Palestinian power shift. The scale of the protests indicates that the leadership of the Palestinian nationalist movement has shifted from the far-off leaders of the Palestinian Liberation Organization to the Palestinian communities remaining in their historic homeland. This shift has major signifiance for the peace process. The 'resident' Palestinians have more to lose than the PLO's exile-based constituencies, and have learned the art of political gradualism better than the exiles. It helps that they know the Israelis better, too, and have some sense of how to build coalitions inside Israeli society.

Israel's commitment to justice. Israel is not South Africa. The Boer elite of South Africa may not see any moral problem in suppressing the black population there, but Israeli society has a much stronger egalitarian strand. The Palestinians are not yet a majority in the area controlled by Israel -- though in time they could become so. But already, many Israelis consider it wrong that, twenty years after their army seized the West Bank and Gaza, these territories' 1.5 million Palestinian residents are still ruled by military law. Maintaining Israeli control in the future will probably require more of the harsh measures that were used last week -- tactics that many Israelis find morally repugnant.

The anger the 'occupied' Palestinians are currently expressing should not surprise anyone. They have been allowed no area-wide elections in 20 years. In 1972 and 1976, most West Bank town were allowed municipal elections -- but when the mayors elected in 1976 raised demands the military administration did not like, they were summarily removed from office. Two of them, Fahd Qawasmeh and Mohammed Milhem, were expelled, joining the 1,300 other Palestinians who have been deported from the occupied areas since 1967.

Denied access to political self-expression, the "occupied" Palestinians have lost some of their basic human rights. They can be held by the security forces for up to six months without being formally charged. Their land can be expropriated on the flimsiest of pretexts. Access to the basics of economic development -- water for irrigation, capital and planning permits for investment projects, free-market competition for commodities -- is tightly controlled or denied altogether.

Nevertheless, these Palestinians have stayed in the land that has been their families' home for generations. They could see only too clearly the wretched fate of those of their compatriots who had fled into exile during earlier Arab-Israeli violence.

It was from the Palestinian exile communities that the PLO first emerged. These exiles were at first dedicated to a "Return" to homes and farms within Israel's 1948 borders, and the establishment of a secular state in all of historic Palestine. Then, from 1974 on, PLO leaders also started paying lip-service to the idea of creating an independent Palestinian state in the occupied territories, alongside Israel.

The PLO leaders were careful to explain this idea as only an interim measure, on the way toward the secular all-Palestine state. However, it fired the imagination of the 'occupied' Palestinians, who had a more realistic understanding than the PLO leaders of the permanence of Israel.

From the PLO's 1974 decision to accept a Palestinian mini-state in the West Bank and Gaza, the organization's popularity in the occupied areas grewtremendously. (In a 1986 public opinion poll, 93.5 percent of the "occupied" Palestinians polled described the PLO as "the sole and legitimate representative of the Palestinian people.") But this support is not as simple as it looks. There are differences over the relative weight to be given to the PLO's interim and ultimate goals. And there are the competing demands placed by the political whims of the Arab countries (on the exiles), and by the Israeli military administration (on the residents).

From 1974 till 1982, the exile constituency was still the strongest inside the PLO. Then in 1982, the Israelis smashed the PLO's exile-based infrastructure in Lebanon. In 1983, one of the PLO's co-founders admitted to me, "I think that now, the people inside have more weight than we do. They are the only source left to resist."

But the PLO leadership is still relevant to the situation in the occupied territories. Ironically, what keeps it so is the Israelis' continued practice of deporting Palestinian nationalists. "How could I stand up and negotiate the future of my people if I knew the Israelis would deport me from my home the moment I said something they did not like?" asks one West Bank Palestinian community leader. "It is much safer to tell them to talk to someone already outside."

At the moment, some in the Israeli military are reported to favor stepping up the deportations. That is not only morally wrong, and forbidden by international law. It is also just plain dumb.

Many Israelis who seek a society that is both Jewish and just now believe that Israel must find a way to get out of the occupied territories. But to negotiate a way out, they will need someone to talk to. Perhaps, on streets of Gaza last week, one could see the beginnings of an indigenous Palestinian leadership that might someday be able to deal that both sides can live with.

Helena Cobban is the author of "The Palestinian Liberation Organization: People, Power and Politics." She is a guest scholar at the University of Maryland.