One of the more improbable chapters in the life of Yasser Arafat was his wink-and-nod understanding with the CIA. In secret, Arafat for the past 30 years allowed his top intelligence officers to maintain regular contact with the agency -- even as he publicly continued his defiant and ultimately fruitless quest for a Palestinian state.

The intelligence liaison was one of Arafat's many straddles -- a way of playing all possible sides of the game. In the early 1970s, when the covert relationship with the United States began, he was simultaneously in contact with the CIA and the KGB, with the radical Egyptians and the conservative Saudis. All these secret machinations didn't get Arafat much in the end, and maybe that's the real point: The things that matter most in the modern world are overt actions, not covert ones.

I stumbled across the U.S.-PLO contacts more than 20 years ago, when I was covering the Middle East for the Wall Street Journal, and published an expose in 1983. With Arafat's passing, perhaps it's a good time to look back at his secret history.

America's dalliance with Arafat began in late 1969, when the CIA first spotted a promising potential recruit in his Fatah organization named Ali Hassan Salameh, known as Abu Hassan. A CIA case officer in Beirut, Robert Ames, made contact through a Lebanese intermediary, and there was a brief exchange of information. I'm told that it was blessed from the beginning by Arafat, who wanted to open a channel to the Americans.

It was a risky relationship for both sides. The Palestine Liberation Organization at that time was the leading terrorist threat to Israel and the West. But Ames's contacts with Abu Hassan continued in the spring of 1970 with a face-to-face meeting in Kuwait. A senior CIA officer then tried to "recruit" Abu Hassan by offering him a large payment in Rome later that year. The Palestinian angrily refused, insisting he was not an American agent.

The botched recruitment was followed by years of bloody turmoil. King Hussein expelled PLO guerrillas from Jordan in September 1970; Arafat responded by creating a secret terrorist wing known as Black September -- with America's former contact, Abu Hassan, as one of its key operatives. After Black September killed Israeli athletes at the 1972 Munich Olympics, the Israelis targeted Abu Hassan for assassination. But around that time, the CIA was resuming contact with the Palestinian intelligence officer, again with Arafat's blessing.

A secret understanding between Arafat's man and the CIA was reached in a meeting at the Waldorf-Astoria in November 1974, at the time of Arafat's visit to the United Nations. It amounted to a mutual nonaggression pact. The liaison deepened during the 1975-76 Lebanese civil war, when Arafat's operatives provided security for American diplomats in West Beirut.

Senior U.S. officials tell me that the Palestinian link helped save many dozens of American lives in the mid-1970s. But Abu Hassan remained a deadly enemy of Israel, and he was finally killed by an Israeli car bomb in 1979. Arafat was devastated by the loss of a man who had become his closest aide, yet he allowed the intelligence liaison to continue with a string of Abu Hassan's successors, in Beirut, Tunis and Ramallah.

All the while, Arafat acted as if the road to Jerusalem lay through Washington -- or, more precisely, through Langley. Like many Arab leaders, he was mesmerized by what he imagined as the power of U.S. intelligence to control events. Gruesome evidence that he was wrong came in April 1983, when Ames was killed by the truck bomb that destroyed the U.S. Embassy in Beirut. But Arafat remained a believer in the secret power of the CIA; that was one of his many mistakes.

Politicians often talk these days about the need for more "human intelligence" about terrorism, as if it's an engine that can be primed if you spend enough money. But the long history of contacts between the CIA and the Palestinians demonstrates just how murky and difficult these operations are -- and how dependent they are on personal relationships. The CIA-PLO intelligence contacts could keep channels open, but they could never substitute for diplomacy.

Peace isn't something that happens in secret. It's an open process of give-and-take. Arafat tried for a time to travel this public road, but he was probably more comfortable in the shadowy world of spies and secret bank accounts. That's one of the lessons for Arafat's successors: A new nation can't be created in backrooms. It's the ultimate overt action, and one that Arafat, sadly, could never accomplish.