Failure has been raw material for Yasser Arafat, the master political alchemist of our age. For five decades Arafat has been falling upward, spinning defeat and miscalculation into personal glory, riches and authoritarian control.

The Palestinian leader had help in his ascent from international organizations, European politicians and, briefly, even the Israeli government. Now they -- and, more important, the Palestinian people -- are abandoning Arafat to the loneliness and impotence of the Ramallah housing compound where he has been cooped up by Israeli edict for nearly two years.

Instead of the instant martyrdom that many predicted or feared, Arafat has found irrelevance in Ramallah. Younger Palestinians herald his slow fade by conducting an open power struggle in the Gaza Strip and by chipping away at the disappearing facade of Arafat's control on the imploding West Bank.

American and European officials visiting the region shun meeting him, secure in the knowledge that they risk no serious criticism at home for not "engaging" with the man largely held responsible in international opinion for the failure of the Camp David peace conference of 2000 and the Palestinian uprising that erupted shortly afterward.

"The paralysis of the Palestinian Authority has become abundantly clear" as "consistent promises by its leadership" to end corruption and violence go unfulfilled and bring "steadily emerging chaos in the Palestinian areas." Those words do not come from an Israeli propagandist but from a stunning July 13 speech to the United Nations Security Council by Terje Roed-Larsen, a resourceful Norwegian diplomat who is the U.N. Middle East envoy and a longtime friend of the Palestinians.

Arafat once consistently transmuted failure as a leader into success as a symbol, as Dennis Ross notes in his highly informative new book, "The Missing Peace." But after making a superficial peace with Israel in 1993 and profiteering from it, Arafat set about subverting even that arrangement. He no longer represents national revolution or Palestinian suffering and victimization.

Ross, who was the diplomatic architect of the Middle East peace process during the Bush 41 and Clinton presidencies, offers convincing detail of the terms offered to Arafat both at Camp David and afterward, and the Palestinian's refusal to accept those conditions or, Ross concludes, any terms at all: "As a symbol, he could not give up Palestinian myths."

Ross does not hold blameless the Israelis, who "acted as if all decisions should be informed by their needs, not by possible Palestinian needs or reactions." He is particularly scathing about former prime minister Binyamin Netanyahu's own subversion of the Oslo agreements and the resulting Palestinian frustrations, which exploded in the September 2000 intifada.

More than 3,000 Palestinians and 900 Israelis have died since then in political violence that seems particularly senseless in view of Ross's account of what might have been.

In recent weeks suicide bombings against Israelis have subsided, but Palestinian-on-Palestinian fighting has flared throughout the occupied territories. That communal violence provoked Roed-Larsen's dire warning of a "real danger of collapse" and brought home even to Arafat enthusiasts the moral and political bankruptcy of his final days.

At one level, Arafat has been outfoxed by his old adversary, Ariel Sharon, who has learned to curb his own tendency of reverse alchemy -- of overplaying a good hand. Sharon has used his proposal to withdraw unilaterally from Gaza a year from now to win praise from candidates George W. Bush and John Kerry, and to muffle reaction even in Europe to the recent indications that Israel will soon build 600 more housing units for settlers on the West Bank, near Jerusalem.

But the Gaza withdrawal plan has also triggered serious fighting among Palestinian factions jockeying for post-Arafat power there. Egypt, after indicating to the United States that it would send 70 to 100 military trainers to Gaza to help with the transition, is now balking at any involvement. Cairo does not want to take sides or, perhaps, risks.

Arafat's failures and betrayal surely justify the Bush administration's refusal to deal with him -- an approach I believe Kerry is likely to continue if elected. And it is hard to argue with the immediate success of Sharon's Poe-like strategy of walling up Arafat alive in Ramallah.

But the very effectiveness of the isolation of Arafat is a powerful argument for increased engagement with those Palestin- ians who might come next and who should be more interested in results than in pursuing self-victimization as a strategy. Leaving vacuums to flourish at a time of regime change is a dangerous approach, as Iraq amply demonstrates.

jimhoagland@washpost.com