JERUSALEM, DEC. 26 -- Three weeks ago the Arab-Israeli conflict and the Palestinian question, once considered the world's most burning issue, had all but vanished from the global radar screen.

The recent summit meeting of Arab leaders in Amman, Jordan, had focused on the Persian Gulf war, snubbed the Palestine Liberation Organization's Yasser Arafat and given a blessing to Egypt's reentry into the Arab fold despite its peace treaty with Israel. President Reagan and Soviet leader Mikhail Gorbachev, at their own summit, concentrated on less intractable matters.

In Israel the status quo prevailed, with the rightist half of Israel's coalition government successfully thwarting diplomatic efforts to convene an international conference on Middle East peace.

Now the Palestinians have returned. With stones and molotov cocktails and a willingness to die on camera, they have clawed their way back onto the international scene and grimly reminded the world of their existence and their anger.

For two weeks, Palestinian youths fought Israeli troops in the squalid alleyways of the refugee camps in the occupied Gaza Strip and West Bank and even on the streets of Arab East Jerusalem. With an unusual degree of unity among often warring factions and with widespread support from their elders, they shut down schools, shops and transportation and persuaded or intimidated more than 100,000 Arab workers to stay home from jobs in Israel. And, in perhaps their most stunning achievement, they stimulated their ethnic brethren, the 750,000 Arab citizens of Israel, to stage a one-day general strike last Monday in solidarity.

The price was high. According to the official body count, 21 Palestinians were killed and 158 injured. Israel says 31 soldiers and 19 Israeli civilians were also injured.

But every death was a victory of sorts for the Palestinians. The death toll brought more rioters to the streets. It also helped draw the attention of the world and led to international condemnation of Israeli measures in putting down the violence -- a major propaganda victory for the Palestinian cause.

Israel reacted with surprise and confusion. The Army, ambivalent about its mission, outnumbered, poorly trained and ill-equipped for the role of riot squad, veered between conflicting tactics that seemed only to fuel the violence. When the Army got tough, beating up suspected rioters or opening fire, it made the youths more angry and more determined to fight. When it backed off, its restraint was viewed as weakness and brought out even more rioters.

After two weeks, the wave has subsided, at least temporarily. Late-night security sweeps that rounded up more than 1,000 suspected instigators and rioters removed some of the main actors, as has the threat of large-scale expulsions. Heavy rains also helped douse the flames, and sheer exhaustion has sent Palestinians back to their homes to regroup and reevaluate.

Still, many answers remain to be sifted from the ashes: Why was this wave of civil violence so much bigger and more intense than the previous ones that have wracked the region during 20 years of Israeli occupation? To what extent were the riots organized by the PLO and other Palestinian groups? Why was the Army so slow to devise a coherent and effective strategy to control the violence?

To what extent has the violence changed the political landscape inside Israel and the balance of power between hawks and doves? And what, if anything, did the Palestinians win that may ultimately prove more lasting than yesterday's headline?

"This has been a danger signal to both sides to find a political solution," said Sari Nusseibeh, a Palestinian philosophy professor who lives in East Jerusalem. "We are both sitting on a volcano. When it blows, it will blow us both up."

It was a lethal mix of Palestinian determination and Israeli military reaction that made this particular explosion so much more sustained and powerful than its predecessors, analysts on both sides say.

The violence that started in Gaza Dec. 9 actually began building long before, as social scientist Meron Benvenisti, an Israeli expert on the occupied territories, pointed out. The number of violent incidents compiled by his West Bank Data Project, a Jerusalem think tank, has nearly doubled over the past two years. A new wave of Islamic fundamentalism has asserted itself, especially in Gaza, where a small cell of the Islamic Jihad movement has gained popularity and forged a pragmatic alliance with the more secular organizations of the PLO.

Behind it all, analysts agreed, is a rising sense of frustration and despair. A new Palestinian generation has grown up under 20 years of Israeli occupation, a generation that has seen no political progress, has lost ground economically and believes it has nothing to lose. In the camps of the West Bank and Gaza, where over half the population is under age 20, this new group has asserted itself.

"You can see something different on the faces of the kids on the streets this time that I've never seen before," said a veteran worker for the U.N. Relief and Works Agency. "It's not just anger, but more a sense of fatalism, as if they are ready to be martyrs."

What was also striking to observers this time was the fact that these youths were not on their own, but quickly gained the support of their elders, who reacted angrily to the toll that Israeli countermeasures took on their families. In many refugee camps, for the first time in memory old men and women were on the front line just behind their children.

"This was not just the young people," said Rashad Shawa, former mayor of Gaza City. "This was everybody."

The spark that touched off the explosion was a stabbing death followed by a road accident. An Israeli businessman, Shlomo Takal, was killed on a busy Gaza street on Sunday, Dec. 6, by an agent of the PLO's Force 17 commando and terrorist squad. Two days later, an Israeli tractor trailer piled into two Arab vans on a Gaza highway, killing four passengers.

The false rumor quickly spread that the driver was Takal's brother. Arabs took to the streets of Gaza the following morning. The Army, caught off guard by the number of demonstrators, opened fire in four separate incidents, killing at least one and wounding 20 others. The wave had started.

Meanwhile, in the West Bank, the region's commander, Maj. Gen. Amram Mitzna, was briefing Israeli reporters on plans for a crackdown on the Balata refugee camp in Nablus. Shabiba, the PLO youth wing, had taken control of the camp and was administering "revolutionary justice" -- beatings and harassment -- to families of residents suspected of collaborating with the Israelis. The situation had been allowed to fester for several months and was intolerable, said Mitzna. The Border Police, a paramilitary group dominated by tough Druze fighters, was to be called in.

Arrests began and Border Police began sweeping male youths off the streets of Balata. They attempted one roundup outside a mosque Dec. 11 after Friday prayers. Shabiba sounded the alarm and hundreds of residents flocked to the area, surrounding the small police unit and hurling rocks. The police opened fire and three residents were killed. The wave had spread.

In each of the early incidents, the Army's initial tough reaction helped spread the flames, according to Palestinian witnesses and many analysts. The timing of the Balata crackdown, which was unrelated to the Gaza incidents and took no account of what was happening there, was especially unfortunate, they said.

The two areas are under separate military commands and their tactics, style and philosophy of how to deal with the subjects of their occupation often seem to differ. Gaza commander Gen. Yitzhak Mordechai is a tough, no-nonsense officer who recently commuted jail sentences of two soldiers convicted of beating up a Palestinian who balked at removing debris from a street barricade. In October, three Palestinians were shot dead after allegedly running a military roadblock in an incident that the Army has yet to explain fully.

Mitzna, on the other hand, was an outspoken opponent of the 1982 invasion of Lebanon who has angered Jewish settlers in the West Bank by his attempts at evenhandedness and who has been accused of being "soft" on Arabs.

He is part of a new generation of Army leaders, including Chief of Staff Dan Shomron and Deputy Chief of Staff Ehud Barak, who appear to have little taste for the job of policeman in the occupied areas. Beset by financial constraints, Israel's military budget has dropped in real terms by 15 percent over the past three years. The new commanders have sought to protect the Army's ability to fulfill its primary mission -- protecting Israel's borders with Syria and Lebanon -- at the expense of other duties.

"We have to have priorities," said Brig. Gen. Ephraim Lapid, the Army's chief spokesman, explaining why the Army was caught with a shortage of riot equipment such as water cannon. "When we check our readiness for war with Syria, we don't need water tankers."

Military doctrine has been to patrol the occupied territories with as few troops as possible both to save on money and manpower and to create the image of a painless occupation that interferes as little as possible with daily life. That means patrols of only four to six soldiers, usually not wearing their helmets and often armed with only a handful of nonlethal rubber bullets or tear-gas canisters along with their M16 rifles.

Such small units, which make their way on foot through the heart of the refugee camps and other population centers, are meant to be nonprovocative. But when the trouble began, they were seen by the rioters not only as provocation but as easy targets. Following a military code that says they should never retreat, soldiers were often trapped and, lacking the means to escape, they opened fire.

To many Palestinians, the smallness of these patrols is a sign of Israeli arrogance.

"They think a handful of them can control hundreds of us," said Muammar, a young Gazan recovering from a broken arm at Shifa hospital in Gaza City last week.

The Army's aura of invincibility was damaged by last month's attack on an Army base by a lone Palestinian commando who reached northern Israel by motorized hang glider from Lebanon. He killed six soldiers before being killed himself, a bloody achievement that gave a psychological boost to the self-image of the budding young warriors of the refugee camps.

Both sides agree that the spark for the violence was spontaneous and unplanned. Otherwise, security officials said, their elaborate intelligence network both overseas and in the territories and the hundreds of Shin Bet internal security agents who work the areas would have picked up a warning.

But by last week, the Palestinian political movements began to catch up. Young Gazans coming out of their mosques after Friday prayers Dec. 18 were clearly prepared to confront soldiers. The strike in Gaza was a measure of political organization.

On Saturday when bands of Palestinian youths rampaged through East Jerusalem, Israeli military officials said the attacks were planned by leaders, some of whom had been shipped in from Gaza earlier in the week. Three banks were hit in rapid-fire succession in the city's main Arab shopping area on Salhedin Street and on some street corners rocks and other materials for building barricades had been piled in advance.

But the one singular triumph of Palestinian organization came last Monday, the crest of the wave of violence, when Arabs inside Israel's borders combined with those in the territories to stage the biggest Arab general strike this nation has ever seen. Every shop was closed in Gaza, the West Bank and in Arab villages inside Israel. Every Arab bus was halted, every worker and schoolchild remained home.

From the first day, Israel's political leadership, like its Army, was caught by surprise. Foreign Minister Shimon Peres and Defense Minister Yitzhak Rabin, leaders of the more dovish Labor Party, were both on overseas missions and did not return for a week after the trouble started. Prime Minister Yitzhak Shamir, leader of the more hawkish Likud, kept playing down the violence, insisting that it was "nothing new" and would soon be over.

They misread the situation in part because they were talking to the wrong people, officials now concede. Army spokesman Lapid said military governors in the occupied areas met daily with local leaders, village notables and political moderates whom most youths look upon as collaborators and whose constituencies seemed to melt away as the violence intensified.

"When the battle is in the street, it's a different leadership," he conceded. "In this last wave we are not sure the leaders had their normal influence."

Rabin returned home Monday night from an 11-day official trip to the United States. As he did, the Army was moving quickly into a new phase designed to cut down on direct confrontations between soldiers and mobs while cracking down with nightly roundups of alleged instigators. The strategy cut down on the rising death count -- the last Palestinian demonstrator was killed last Tuesday -- a major factor in international condemnation, while helping quell the violence.

Most Israeli analysts said the prolonged wave has made Israel no more inclined to seek a diplomatic solution that would cede most or all of the territories to the Palestinians in return for a peace treaty. In a public opinion poll in yesterday's Yedioth Aharonoth, Israel's largest daily newspaper, 69 percent of those Israelis surveyed favored harsher security measures in the territories and 47 percent said the riots had made them politically more hard-line.

"The riots only play into the hands of political extremists on both sides and we have many extremists here in Israel," said a senior Foreign Ministry official.

Establishment leaders in both Labor and Likud have expressed agreement with Shamir and Rabin that the first step is to put down the unrest before any political changes can be discussed. Labor politicians are particularly wary of sounding dovish for fear of being branded bleeding hearts or accused of stimulating further unrest. In any event, few see a realistic negotiating partner willing to step forward from the occupied areas.

"Political discourse here is frozen, fossilized," said social scientist Benvenisti. "Three months or a year from now there will be another wave and we'll be three months or a year older but not wiser."

While the politicians ponder, the combatants in this conflict, which Benvenisti describes as an "intercommunal, twilight war," are drawing their own lessons. The Israeli Army, its reputation bloodied and its tactics discredited, is searching for new strategies to maintain control and contain the next round of violence.

Palestinians said their people have gained a new measure of self respect from their willingess to stand against the Army. But now they are likely to turn inward for a time. Mubarak Awad, a Palestinian peace activist under threat of deportation, said he fears that, as in South Africa, the violence will move into a second internal phase in which Palestinians will retaliate against those among them who are identified as Israeli collaborators.

About one thing, both sides agree -- nothing has been resolved. The next wave is inevitable.

"It's going to burst out again and it's going to be more bloody and more organized," said Awad. "The iron fist is not scary anymore. People are willing to die here."