NEWS ANALYSIS : Palestinians, Weary of Rebellion, Are Ready for Talks : Mideast: The uprising has lost its vitality, and economic gloom is deepening. ‘There must be some political move,’ says a West Bank activist.

It was about as festive a day as it gets in Nablus, the hardened heart of the Palestinian revolt, last week at the end of Ramadan, the Muslim month of fasting and prayer.

The old cluttered center of the city was brightened slightly by stalls selling modest toys for children. Little girls wore ribbons in their hair and boys tiny coats and ties as their parents paraded them under archways in dark, winding alleys.

Otherwise, the bleak landscape seemed unchanged from the previous long months of the uprising against Israeli rule. Layers of graffiti cover the stone walls of the city, posters of dead youths mark street corners and the approach of ever-present army patrols sets off the familiar scurrying for cover, followed by the rain of stones to keep the soldiers away.

It is perhaps this unchanging gloom, deepened by economic hardship and the defeat of their champion, Iraq, in the Persian Gulf War, that is forcing Palestinians to contemplate, however reluctantly, going to peace talks under conditions less favorable to them than they were offered a year ago.

Even Palestinians who admit deep misgivings about the utility of talks proposed by the United States to involve Israel, Arab governments and the Palestinians express a willingness to proceed.

“We need something. The uprising has gone as far as it can go, and now there must be some political move,” said Maher, a 30-year-old activist and resident of Nablus’ Old City, who nonetheless described the proposed talks as useless.

Added a companion: “After the war, people are tired. This makes them grab for anything.”

The political move in play is a plan from U.S. Secretary of State James A. Baker III to open dual-track Middle East peace talks--one track bringing Israelis and Palestinians together, the other joining Israel and Arab states.

In order to frame a role for the Palestinians, Baker is scheduled to meet today with three Palestinian delegates, the third such meeting since he began the peace shuttle six weeks ago.

Palestinians complain they are being asked to join talks in which precise goals are clouded in ambiguity. The Palestine Liberation Organization, to which many Palestinians pledge loyalty, is supposed to be excluded from the talks, in part because it lent moral support to Iraq in the war. The status of Arab neighborhoods of Jerusalem is not to be brought up, at least at first. Israel proposes that the Palestinians attend the peace conference only with a team from Jordan, as a sign that they are not an independent people.

Perhaps most important in Palestinian eyes, there is no guarantee that Israel will withdraw from most or all of the occupied West Bank and Gaza Strip as part of a final settlement.

“We are weak and are being squeezed,” said Mahdi Abdul-Hadi, a Jerusalem-based political analyst. “But there is little alternative.”

Local Palestinian leaders have asked Baker for a series of explanations about what they are getting into. They were especially eager to know what the United States would do if Israel refused to stop building settlements or refused President Bush’s public call to surrender land as part of a peace accord.

Last year, local Palestinian leaders and the PLO accepted American-brokered terms for opening talks with Israel on an Israeli plan for elections. The meeting would have represented the first recognition by Israel of Palestinian political rights and would have taken place without the complications of outside Arab involvement.

But Prime Minister Yitzhak Shamir killed his own plan just as it was about to hatch, fearing it would lead to eventual withdraw of Israel from the occupied lands.

Since then, a series of political and economic debacles has made life harder and harder for Palestinians and reduced their leverage.

Curfews, arrests and constant military pressure have sapped the vitality of the intifada, as the 40-month-old uprising is known. Economically, the Palestinians are in grave distress. Few factories are open in the West Bank and Gaza. Daily strikes have crippled commerce.

The war over Kuwait has ruined Palestinian prosperity in the oil emirate and dried up the flow of money from the Gulf to the West Bank and Gaza. To separate civilian sides after a series of knifings by Palestinians, the Shamir government has cut off thousands of Palestinians from jobs inside Israel.

Politically, the Palestinians are reeling from a year of disaster. The ascendance of Shamir and a right-wing coalition effectively ended diplomatic progress, at least until now. Before and during the Gulf War, the PLO threw in its lot with Iraq’s Saddam Hussein and came out a loser: It has lost financial support from rich Arab states and moral support from friends in Europe. Baker has called for the group’s exclusion.

Nablus (population 120,000) is a prime exhibit of depression. Thousands of residents have been made homeless by the curtailment of work in Israel. More than 120 have been killed by soldiers since the uprising began, and two-score others have been slain by other Palestinians on suspicion of spying for Israel, selling land to the occupation government or for crimes of vice.

Despite the setbacks, there is deep suspicion about the wisdom of attending an American-supervised conference. Reports that Saudi Arabia and Egypt, both Arab allies of the United States, have been seeking out compliant leaders in the West Bank and Gaza heightened skepticism. “The Saudis have money, but they can’t buy peace here with money,” challenged Maher, the Nablus activist.

Still, Maher and two companions were willing to accept being thrown into a team with Jordan and even to consider a waiting period of self-rule, so long as it eventually leads to statehood.

“Yes, we didn’t say these things a year ago,” said Maher. “But our situation was different. We are living bad times.”