Arafat’s Star Sinks Over Stand on Iraq : Persian Gulf: The PLO is divided, and moderate Arab backers resent his support for Saddam Hussein.

Yasser Arafat, chairman of the Palestine Liberation Organization, stood up at a meeting of Arab leaders last week to present his proposal for resolving the Persian Gulf crisis, and he was only halfway through it when President Hosni Mubarak of Egypt told him to sit down.

Miffed, the volatile PLO leader thrust a piece of paper at Mubarak with the names of three Arab leaders who he said wanted to go to Baghdad to meet with Iraqi President Saddam Hussein.

One by one, Mubarak polled them. One by one, they said no.

Three days earlier, Saudi Arabia’s King Fahd had sent a low-level delegation to meet Arafat at the airport, then kept him waiting six hours for an audience. Arafat fumed.

Arafat, whose dramatic renunciation of terrorism a little over a year ago gained him the recognition as an unofficial Arab head of state for which he had plotted and dreamed for decades, seems to be back in the doghouse.

His decision to buck the influential moderate Arab leaders who have helped carry the Palestinian flag over the past several years and cast his lot with the isolated Iraqi president has divided the Palestinian organization and left its mercurial chairman in his most tenuous position yet, according to some PLO officials and Palestinian analysts.

“I think I share the views of a lot of people in that region when I say that what the PLO is doing has short-term gains but that Arafat is probably finished as a result,” said Neil C. Livingstone, a consultant on international terrorism and a longtime student of the PLO. “I know there have been many reports of his untimely end, and they’ve never come to pass, but I don’t see how Arafat, after having hitched his horse to Baghdad, can ever come back.”

In backing Hussein, the PLO is risking not only the alienation of the West and moderate Arab countries like Egypt, which had interceded to move the Palestinian cause forward, but the financial support of wealthy Persian Gulf states--until recently, commitments of about $386 million a year--which have helped build the PLO’s financial empire and finance the Palestinian uprising in the Israeli-occupied West Bank and Gaza Strip.

“It would seem to me extremely difficult for Arafat at this point to take up business as normal with all the regimes that voted against the occupation of Kuwait,” one analyst said. “Secondly, I don’t see how he can be received as a brother any longer. He’s going to be very isolated.”

Some hard-line PLO officials say they are backing Iraq in the expectation that Iraq will come out the winner in a major reshuffling of the balance of power in the Middle East.

They believe that Iraq’s Hussein will be able to outlast international economic sanctions and will also prevail in any military confrontation because of the American public’s unwillingness to become involved in what one PLO official called “another Vietnam.”

“The economic sanctions, OK, are going to hurt,” a PLO official in Tunis said, “and they’re going to squeeze the country for a while. But as you know, economic sanctions in modern history have not been very effective. With the first rise in the price of oil--and oil is a strategic commodity to the U.S., Europe and Japan--it’s very likely that a lot of people will be looking to buy the oil cheaper and go around the boycott.

“Militarily speaking, I don’t think American public opinion will be prepared to have losses of troops. They’re not going to repeat another Vietnam situation, and Iraq is not a Panama or a Grenada. It has a large army and it seems very difficult, militarily speaking, to subdue such an army without huge losses.”

There has been nothing approaching unanimity within the PLO for backing Iraq. Many PLO officials have expressed strong reservations about the possibility of alienating the PLO’s financial benefactors, and Egyptian PLO leaders have tended to fall in with Mubarak and other moderate Arab forces.

The rift has become so marked that the organization has been unable even to present a clear version of how it voted at the Arab summit meeting on a resolution condemning the Iraqi invasion, supporting Saudi Arabia’s decision to call in U.S. and other foreign troops and calling for the dispatch of Arab military forces to Saudi Arabia.

Egypt’s ambassador to the United Nations, Amr Moussa, told reporters that the PLO joined Libya and Iraq in voting against the resolution.

The next day, the PLO’s ambassador to Egypt, Said Kamel, issued a statement saying the organization had indeed opposed imposing sanctions against Iraq but was now against the invasion of Kuwait.

Kamel’s statement prompted denials from other PLO leaders and a clarification from the PLO leadership in Tunis which insisted that the PLO had abstained from voting on the resolution. The PLO then issued another statement endorsing Hussein’s proposal for considering the withdrawal of his troops from Kuwait at the same time that consideration is given to Israel’s withdrawal from the occupied territories and Syria’s withdrawal from Lebanon. Later, it announced that the resolution adopted at the summit meeting was not legal anyway because it had not been unanimously adopted.

The confusion continued Wednesday, with reports that Kamel, whom PLO leaders have long criticized as too sympathetic to the Egyptian government, had been fired. Kamel denied the reports, insisting he was “still the ambassador.”

Arafat’s closest advisers say the PLO is not siding with Hussein so much as attempting to play the role of a neutral mediator in a region in which all the normal forces of diplomacy have become dangerously polarized.

“Of course we condemn the invasion,” one official said. He said Arafat feels that he would no longer be able to act as an independent intermediary if he issued a public condemnation.

On Tuesday, Arafat was back in the role of diplomat, sending off to the leaders of France, Italy, Britain, China, the Soviet Union and, through intermediaries, the United States what his spokesman called an urgent message conveying a “proposed solution” to the Persian Gulf crisis.

“President Arafat is continuing his efforts to pave the way for an Arab solution, a political one, and to defuse the explosive situation,” the spokesman, Bassam abu Sharif, said. “We regard that the only possible political solution is an Arab solution. We’re not in a position to talk about it. We want to keep the momentum going by following silent diplomacy.”

Privately, many other Arab leaders are skeptical. They did not welcome Arafat’s last peace proposal, backed by Libya and Yemen, which would have allowed Iraq “justified claims” on some disputed Kuwaiti territory and oil revenues. It also called for the withdrawal of all foreign troops and a referendum on whether the deposed emir should return to Kuwait.

Egypt was suspicious of the PLO’s increasingly strong alliance with Baghdad even before the Aug. 2 invasion. The PLO had already moved its military headquarters to Baghdad and within the past two months had moved most of its military units in Jordan to Iraq, according to sources familiar with the organization.

Egypt was clearly alarmed by these movements and by Arafat’s seeming alliance with Iraq at two recent Arab League meetings. The concern expressed by Egyptian leaders prompted the postponement of a PLO Central Council meeting that had been scheduled for the beginning of the month in Baghdad.

The Egyptians are angry, but not all are ready to give up on Arafat. Many recognize that he was backed into a corner by the failure of efforts to advance the Palestinian cause through the peace process, combined with rising anti-American sentiment in the region.