Is Arafat the ‘Big Loser’ or a Phoenix Who’ll Rise Again? : Mideast: The PLO leader, by siding with Iraq, may have forfeited any role in settling the Palestinian issue. But he has come back from other missteps.

Abba Eban, the Israeli statesman and diplomat, once said that Yasser Arafat, the Palestine Liberation Organization chairman, “never misses an opportunity to miss an opportunity.”

By most accounts, including those of one-time Arab allies, Arafat, by backing Iraq in the Gulf War, has more than missed an opportunity--he has forfeited any role in settling the Middle East’s most-pressing problem.

“Next to (Iraqi President) Saddam (Hussein), Arafat is the big loser,” said a European diplomat here. “He may think he is some sort of phoenix and will rise from the ashes. But if there is to be a Palestinian settlement, it won’t involve the PLO, if Arafat remains its leader.”

But advises Nabil Shaath, one of Arafat’s closest aides: “Don’t be so quick to draw that conclusion. The PLO is still the only representative of the Palestinian people. And you’re not going to find anyone other than Arafat to lead the PLO.”

On the surface, this appears to be wishful thinking, with the evidence running strongly to the contrary.

His usual critics, of course, write Arafat off, saying that he showed both stupid judgment and his true colors by siding with Hussein, who has constantly opposed any settlement with Israel.

Besides Israel, which obviously sees Arafat this way, this view is held by the United States. Secretary of State James A. Baker III told congressional committees even before the Gulf War that there was no role for the PLO in the Middle East peace process. Now, he says, the PLO is even further out of the picture.

If Arafat could expect longtime enemies to take such positions, more alarming is his loss of support, politically and economically, from his traditional allies, including all of the oil-rich Gulf states. They had provided him with hundreds of millions of dollars in aid.

Arafat “is a clown,” said Prince Bandar ibn Sultan, Saudi Arabia’s ambassador to the United States. The prince added that, while his government continues to support a Palestinian homeland, it now distinguishes between the PLO and the Palestinian people.

That distinction also was driven home last month when foreign ministers of the seven Arab states in the anti-Iraqi coalition omitted mention of the PLO in their communique, which called for a Palestinian homeland. This was the first time the PLO was left out of such a declaration, said Arafat adviser Shaath.

A similar omission occurred on Sunday, when Egyptian President Hosni Mubarak did not include mention of Arafat or the PLO in a speech, in which he said settling the Palestinian issue “is the first key for lasting and just peace in the Arab region.”

In fact, Mubarak indirectly attacked Arafat, lumping him in with Hussein, saying those who pretended to leadership of the Palestinians were engaging in the “leadership of illusions.”

In February, the PLO was snubbed by the European Community. German Foreign Minister Hans-Dietrich Genscher then emerged from a meeting with Syrian President Hafez Assad to report that Syria, which already had backed many of Arafat’s foes in the Palestinian movement, might be willing to sign a peace treaty with Israel, without PLO involvement.

And while some other European leaders are less anxious to dismiss the PLO, Arafat could not have found much comfort in the words of French Foreign Minister Roland Dumas, who said last week that “we do not know the wishes of the (Palestinian) people. . . . We need to wait a little bit before deciding whether to deal with the organization.”

The bad news for Arafat goes on, even in Jordan where 60% of the population is Palestinian and the government tilted strongly toward Iraq, in part because of the link Baghdad forged between the Gulf crisis and the Palestinian cause.

According to Azzam Tamimi, a leader of the increasingly influential Muslim fundamentalist Hamas organization, which is a challenger to the PLO for power within Jordan, “before the crisis, the relationship was improving. . . . But we’ve drifted apart,” because Arafat was too compromising in accepting Israel’s right to exist.

Some ordinary Palestinians in Jordan also question whether Arafat contributed to Hussein’s defeat, by providing him support only in speeches. “Abu Ammar (Arafat’s nom de guerre) is finished,” said Osama Jarrar, 32, a Palestinian shopkeeper in Amman. “He’s poor politically. Iraq was hoping for more from Abu Ammar, more than he did. How can you help by just talking? He should have sent his people. He should have sent the Fatah (Arafat’s PLO faction) from Lebanon.”

Although the negative words may sting, Arafat has recovered from worse wounds before.

But whether he can overcome the bank-breaking loss of the Gulf states’ economic aid is another matter.

Just for starters, many if not most of the 350,000 Palestinians who worked in Kuwait will now be excluded, Kuwaiti officials have said, causing a loss of at least $300 million a year in earnings, much of which was sent to the occupied territories.

Worse, though, to the PLO itself is the loss of revenue paid directly to Arafat from a 5% PLO tax collected by the Gulf states from all Palestinians working in those countries. To sharpen the pain, the tax is still being collected--and kept.

Still, the view that Arafat will rise again persists. “Obviously we are worse off,” says Shaath, who meets several times a month with Arafat. “Iraq is destroyed, Kuwait is destroyed and the Arab world is divided. We lost a lot financially, and our people in Palestine were subjected to their worst treatment ever by the Israelis.”

But Shaath said in an interview in the publishing house he runs here that there was no option other than backing Iraq because the Palestinian people demanded that stand, and “Arafat gets his mandate from his people.”

All Arafat could do was to try to find a way to peace and keep the situation in hand, which he did, Shaath said, by preventing terrorism and heading off Palestinians in Lebanon from attacking Israel.

“Arafat couldn’t have done more,” said Shaath, the rotund, comfortably situated head of the Arab region’s largest publisher of children’s books. “And this should be recognized by the world. So the situation is not really as bad as it looks at first.”

Shaath argued that Egypt and Saudi Arabia had sided with the United States against Iraq to obtain some leverage in the Palestinian dispute. They will come back to the PLO when they realize their own people demand it, Shaath said, adding, “European leaders remain committed . . . to the PLO leadership.

“Besides,” he said, “this war has definitely produced one result: A change in the attitude that one country can invade another, and that has to apply to the Israeli occupation of the Palestinian homeland.”

Arafat, in an interview Sunday in the Spanish daily newspaper El Mundo, denied that the PLO had lost. “No, on the contrary, it has shown that the first cause of the Middle East is the Palestine cause.”

Arafat said that the United States and Europe, which rejected Hussein’s attempts to link his invasion of Kuwait with the Palestinian problem, realized there could be no Middle East peace until the issue of Palestine was resolved. Thus, it is the United States which will bring the PLO back into the game, Shaath suggested.

Times staff writers Nick B. Williams Jr. in Amman, Jordan, and Norman Kempster in Washington contributed to this report.