A few days after he invaded Kuwait, Saddam Hussein sent a message to the White House with a remarkable offer -- to make peace in the Middle East and recognize Israel's right to exist. There is only one problem with the offer: no one in the White House, especially President Bush, believes any of Saddam's promises. The message was delivered through the channels of the Palestine Liberation Organization and one of Saddam's few remaining allies, PLO leader Yasser Arafat.

Arafat, ever the survivor, has backed himself into a corner by throwing his lot with Saddam. It has been a dangerous gambit for Arafat. He has rejuvenated his sagging reputation among the Palestinians who see Saddam as the new Arab leader who can stand up to Israel.

But Arafat has regained his reputation at home by paying a terrible price abroad. The West will shun him, and the rich Arab oil sheikdoms will cut off billions of dollars in aid to the PLO.

Arafat was driven into Saddam's arms by frustration with the United States and Israel, his aides confided in us. He banked everything on dialogue with the United States and U.S. pressure on Israel, but has now abandoned hope of making that work.

Arafat took a chance on the United States beginning in December 1988, when he renounced terrorism and recognized Israel's right to exist. He met the conditions for U.S.-PLO talks, but the United States never let Arafat meet with top U.S. officials. Instead, he was required to send representatives to meet with the U.S. ambassador in Tunisia.

The negotiations dragged on, with Israel refusing to budge and Palestinians becoming more disillusioned with Arafat's gamble. Finally, a PLO renegade launched an unsuccessful terrorist attack on an Israeli beach, and all bets were off. Arafat refused to condemn the raid because he was in danger of looking like a U.S. stooge. So the United States cut off his precious dialogue.

Confidants say the cutoff was one of Arafat's lowest moments. "He has sucked up to the U.S. for 18 months and had nothing to show for it," one Arafat associate told us. "He couldn't even get a visa to come to the U.S. Not even to New York to address the United Nations like other world leaders. How do you think we felt when we saw Nelson Mandela embraced by President Bush at the White House? He was once a terrorist, too, and he even stood next to Bush and refused to renounce force against the South African government."

When the talks broke off, Arafat took stock of his sagging popularity and began moving his headquarters to Iraq and began forming an alliance with Saddam.

The invasion of Kuwait on Aug. 2 caught Arafat by surprise, but for whatever reason, he stuck with Saddam and has been advising him on some aspects of Iraq's public response to the buildup of U.S. troops in Saudi Arabia. Highly classified U.S. reports indicate that it was Arafat who pressed Saddam to make his withdrawal from Kuwait conditional on the withdrawal of other Middle East nations from the territories they occupy by force.

On Aug. 12, Saddam offered to withdraw his forces from Kuwait when "all issues of occupation" were resolved, starting with the unconditional withdrawal of Israel from the West Bank, Gaza Strip and Golan Heights.

The secret part of Saddam's proposal, which would not ingratiate him with the Palestinians, came in his letter to the White House on Aug. 13. He said he would recognize Israel's right to exist. The message, written by hand, was first sent to Washington from Tunis. It was cleaned up in a more formal fashion by Arab sources in Washington before going to the White House. We have seen a copy of the handwritten message. It said, "Iraq is now offering the implementation of all U.N. Security Council resolutions pertaining to the Middle East."

Those resolutions call for Israel's withdrawal from the occupied territories, and recognition of Israel as a legitimate, sovereign country. The message continued, "It is an opportunity to establish peace. To accept a two-states resolution and to implement a whole Middle East solution as the only way to establish stability in the Middle East and thus Peace. This is the only way to protect and safeguard international interests in the Middle East and, in particular, Western interests.

"If not, this will mean that the U.S. wants to occupy Saudi Arabia and other parts of the Gulf. The Middle East is now in turmoil. The credibility of the U.S.A. is being tested. The administration should decide: Does it want the friendship of the Arabs and mutual respect? Does it want an exchange of interests? Or does it want war with the Arabs?

"We offer peace with Israel. We hope this time the Israelis will ask the U.S. administration to push for peace."

If Saddam's motives cannot be trusted, at least the signal from Arafat as messenger was more decipherable. He is trying to resurrect his credibility with the White House and demonstrate that he can act as a peacemaker instead of an ally with belligerent Saddam.