TUNIS, SEPT. 24 -- As tension rose two days before Iraq invaded Kuwait, a worried Yasser Arafat, head of the Palestine Liberation Organization, flew from Baghdad to Kuwait with an urgent message for Sheik Jabir Ahmed Sabah.

The Kuwaiti ruler, according to an aide to Arafat, received the PLO leader in his opulent palace with smiles and brotherly kisses. But he quickly soured when he heard the message: Say "maybe" to Saddam Hussein, Arafat pleaded. Or say "yes, but . . ." But whatever you do, do not stiff-arm the Iraqi president because he means business and his troops on the Kuwaiti border represent a real danger.

Arafat's unsuccessful last-minute attempt to head off the Aug. 2 invasion of Kuwait, as recounted by his aide, marked the beginning of what has become a full-time mediation effort that has cast the PLO leader in the unwelcome role of lawyer for Iraq and lost support for the Palestinian movement among conservative Arab governments and the West.

The PLO's stand since Aug. 2 -- refusing to join Arab governments that have lined up with the United States in military deployment against Iraq and at times displaying sympathy for Saddam's policies -- has reflected a rush of support among Palestinians throughout the Middle East for Iraq's military and rhetorical stance against the United States. But it also has largely halted the diplomatic momentum and international sympathy built up since the organization formally recognized Israel and renounced terrorism in 1988, according to diplomats and PLO leaders.

At the same time, the crisis touched off by Iraq's seizure of Kuwait has eclipsed the Palestinian uprising in the Israeli-occupied Gaza Strip and West Bank, distracting world attention from a struggle that had generated support for the PLO since its outbreak in December 1987. Although Arafat has bounced back before after being counted out, even his most ardent lieutenants acknowledged in interviews that his PLO leadership has suffered a damaging setback since Iraqi tanks charged across the Kuwaiti border.

"We are going down now on the graph, yes, but we will come back up, with more bitterness and more anger," said Khaled Hassan, a Central Committee member in Arafat's Fatah guerrilla organization.

Saudi Arabia, one of the PLO's largest financial contributors and most faithful political supporters, has turned openly hostile, although PLO officials say there has been no notification of a funding cutoff. King Fahd, the Saudi monarch, snubbed Arafat at last month's Arab summit conference in Cairo. Since then, he reportedly has refused to take Arafat's telephone calls.

Abdallah Bishara, the Kuwaiti secretary general of the Saudi-dominated Gulf Cooperation Council, said several days ago that "there is no more room" for Arafat's PLO leadership in the Persian Gulf region because of his stand in the crisis. According to PLO and other diplomatic reports, a number of Palestinians already have been fired from their jobs in gulf countries and expelled.

Arafat's mediation efforts illustrate the frantic pace of recent PLO diplomacy. Hassan complained that much of the hostility stems from misunderstanding of Arafat's role. From the beginning, he said, the PLO leader has sought an intra-Arab solution that would keep foreign forces out of the region and prevent war while at the same time getting Iraqi occupation forces out of Kuwait.

"We are trying to solve the problem and prevent the war, and everywhere we go, people are saying, 'Oh, oh, oh,' " he said in an interview at his home in the Tunis suburbs.

Bassam Abu Sharif, Arafat's foreign policy adviser and spokesman, emphasized that Arafat's first move after the invasion was to fly to Cairo to consult with Egyptian President Hosni Mubarak. At Mubarak's urging, the PLO leader flew to Baghdad to pass along Mubarak's warning that a combined U.S. and Israeli attack was possible unless Saddam pulled back, Abu Sharif said. His account of this largely secret diplomacy could not be independently confirmed.

At the same time, however, PLO foreign policy chief Farouk Kaddoumi sought to prevent a clear condemnation of Iraq by Arab League foreign ministers gathered in Cairo, diplomats pointed out. Kaddoumi dissociated the PLO from the condemnation issued Aug. 3 by a 13-nation majority of the 21 Arab League members.

After touching base again with Mubarak and relaying Saddam's refusal to withdraw, Arafat flew to Jiddah on Aug. 6 to see Fahd and urge talks with Saddam on a political solution. Arafat's incoming plane waited on one runway while Defense Secretary Richard B. Cheney's plane took off from another, carrying Fahd's approval for dispatch of U.S. forces to Saudi Arabia, Abu Sharif said.

Arafat's mission suddenly changed when Mubarak called an Arab summit conference. After discussions with Fahd, the PLO leader flew again to Baghdad to urge Saddam to attend the summit even in the knowledge that Sabah would represent Kuwait. Saddam declined to attend personally but sent Deputy Prime Minister Izzat Ibrahim and Foreign Minister Tariq Aziz.

Angered by another foreign ministers' condemnation on the eve of the summit, however, Saddam issued a vitriolic statement from Baghdad urging the Egyptian and Saudi people to rise up against their governments and accusing Fahd of being unworthy of his role as guardian of the holy cities of Islam, which are in western Saudi Arabia. Fahd, attacked on the issue he has called the most important to his reign, was outraged and in no mood for compromise by the time the Arab leaders got together, Abu Sharif said.

Mubarak, equally angry, ignored shouts from Arafat and pushed through the decision to send Arab troops to Saudi Arabia and associate them with the U.S. and other troops forming an international force there against Iraq. By then, Arafat had clearly split with the Arab League majority and associated his PLO with a minority including King Hussein of Jordan, Libyan leader Moammar Gadhafi and a few other Arab leaders.

Salah Khalaf, Arafat's top PLO lieutenant, said the refusal to become associated with condemnations of Iraq and the U.S.-led military buildup in Saudi Arabia, although it has caused irritation in the Arab world and the West alike, has left Arafat with an open channel to Saddam for peacemaking attempts that are still underway, with Iraqi withdrawal from Kuwait a major goal.

"The PLO is the only one in the world that can talk to Saddam Hussein about a political solution and be listened to," said Khalaf, who is widely known by his nickname Abu Iyad.

But Arafat's reluctance to condemn Iraq also was a natural reaction to the widespread support Saddam has received from Palestinians in Gaza and the West Bank, Jordan, the gulf and refugee camps around the Middle East, PLO leaders pointed out. Frustrated by lack of progress in Arab-Israeli peace efforts and the June 20 rupture in U.S.-PLO talks, countless Palestinians have delighted in Saddam's tough rhetoric and his challenge to Washington.

An authoritative Arab source said Saddam also has told Arafat he would be amenable to a political solution that links Iraqi withdrawal from Kuwait to "a step" toward negotiations on Israeli withdrawal from Gaza and the West Bank. This has created hope in PLO circles that Arafat may yet come out of the crisis with a gain for the Palestinian cause.

Although the United States has refused to consider any such linkage, the high-ranking source said, the proposal is a key part of peacemaking efforts by Arafat, King Hussein and other Arab leaders who have refused to confront Baghdad.