TUNIS, JAN. 7 -- Caught between conflicting forces, Yasser Arafat is pinning the Palestine Liberation Organization's hopes on a last-minute deal averting war in the Persian Gulf to advance long-cherished dreams for an international conference on the Middle East.
Unwelcome in the gulf states that once were his main financial backers, challenged inside the Israeli-occupied territories by Islamic fundamentalists and perceived as increasingly dependent on Iraq, the PLO chairman has much riding on a peaceful outcome of the confrontation between Iraq and the United States.
Arafat, in a weekend interview, recounted Palestinians' frustrations with two generations of what they consider unkept promises and misplaced trust in the international community, and said that an international conference -- which Israel still firmly opposes -- "is the only chance the Palestinian people have to achieve something."
Despite Arafat's reputation for such rhetorical flourishes, Western diplomats and political observers say they are convinced that some formula of words about the international community's responsibility to tackle the Palestine question after Iraq relinquishes Kuwait holds the best chance of breaking the deadlock between Baghdad and Washington.
France and other members of the 12-nation European Community long have favored an international conference on the Middle East and last month President Bush endorsed, in principle, such a conclave "at an appropriate time."
With these factors in mind, Arafat said, "I am looking for a way out that will include both the gulf crisis and the Palestinian issue," and he added he was "66 percent" convinced war would be avoided.
But PLO aides concede that Arafat has little direct say with Baghdad, despite his claims that the Palestinians persuaded Iraq on Aug. 12 to link evacuation of Kuwait to other regional issues -- such as Israeli occupation of the West Bank and Gaza Strip and Syria's Golan Heights and the Syrian military presence in Lebanon.
The PLO, which prides itself on maintaining independence of Arab governments intent on controlling its cause -- with its highly emotive charge for the world's Moslems -- has rarely been perceived as so beholden to a foreign power as it is to Iraq today, diplomats here said.
PLO cadres disagreed, however, claiming they remain faithful to their traditional tactics of giving as little ground as possible in difficult situations. They argued that Arafat refused to go along with Iraqi requests for Palestinians in Kuwait to stage pro-Baghdad demonstrations or to organize a police force to hunt down the Kuwaiti resistance.
Nonetheless, back in Baghdad today, Arafat addressed a Palestinian rally and -- surrounded by senior Iraqi officials -- declared his firm support of Iraq, Reuter reported. "Iraq and Palestine represent a common will," he said. "We will be together side by side."
PLO officials here, however, acknowledged that Iraq's occupation of Kuwait has hurt the Palestinian community there -- which was the biggest and richest in the diaspora -- and undermined the PLO's finances, depriving it of one of its principal sources of revenue. Arafat estimated Palestinian losses in Kuwait at $10.5 billion.
About 300,000 Palestinians have remained in Kuwait, he said, and PLO members unofficially concede that they are virtual hostages, a situation that limits PLO freedom of maneuver on the gulf issue.
PLO officials also acknowledge that reported Iraqi mistreatment of Palestinians in Kuwait has dampened the original enthusiasm for Iraqi President Saddam Hussein among Palestinians abroad -- especially in Jordan, where many Kuwait residents have fled.
But PLO doctrine has always refused to sacrifice principle to spare Palestinian communities the rigors of ill-disposed Arab governments, and the cult of sacrifice for Palestinian nationalism is deeply imbedded in Palestinian families.
Gulf governments have stopped their subsidies for the occupied territories, and Arafat said private contributions from Palestinian communities in the gulf, the United States and Latin America also are down.
With less money to pump into the occupied territories, the PLO is also less able to counter the growing influence of the radical Islamic fundamentalist movement Hamas, whose violent tactics -- such as the recent spate of knifings of Jews -- are proving more popular with Palestinians. PLO aides admit Hamas's superior strength in Gaza, where the fundamentalists won key trade union elections recently.
Worried Palestinian officials here said Hamas felt strong enough to demand half of the seats on the previously PLO-dominated National Council, which directs the intifada, the three-year-old Palestinian uprising against Israeli occupation.
In a move that a PLO aide said "did not please us," Iraq included Hamas among hundreds of radical Islamic fundamentalists invited to Baghdad this month in a show of support for Saddam that also undercut PLO influence in the occupied territories.
Mindful of such developments, Arafat justified his call for an international conference, saying, "We need something to show our young people" involved in the uprising that "there is no double standard" between the international community's sending "an armada" to force Iraq out of Kuwait and its toleration of Israel's 23-year-long occupation of the West Bank and Gaza.
But as the U.N. Security council's Jan. 15 deadline for Iraq to withdraw from Kuwait nears, many Palestinians appear to share a widespread Arab feeling of impending disaster. Arafat said he foresaw "many new faces" among Arab leaders, and said that "whatever happens, there will be a new order."
PLO pessimists predict that even Arafat, who has made a profession of dumbfounding doomsayers predicting his downfall over a quarter century, may finally succumb.
He jauntily dismissed such a fate, saying, "I am the phoenix bird who rises from his ashes."