NEWS ANALYSIS : Palestinians Seek Real Gains After PR Coup : Mideast: Wish list includes own police force and schools. They expect U.S. to break any impasse.

As Palestinian delegates left Madrid after the first segment of the Middle East peace conference, satisfaction with their apparent public relations coup turned to longing for something tangible soon from their coming talks with Israel.

Their wish list is exhaustive. Within in a year, they hope, Palestinians will have their own police force and tax collectors. They will fully control their schools and what their children are taught. Business and building permits will be handled by a Palestinian bureaucracy.

They also want to reserve a Palestinian passport for Yasser Arafat, the head of the Palestine Liberation Organization. But that can wait a few years.

They are suspicious of the Israeli will to negotiate and count on the United States to deliver when things reach an impasse.

“It is not enough for everyone to say they want peace. It’s time to make it,” said Faisal Husseini, a key figure among the delegates from the occupied West Bank and Gaza Strip. “Our people must see something from the Israeli side. If not, then America must break the deadlock. America is everywhere and everything in this conference.”

The morning-after musings in their Madrid hotel by Husseini and others reflected a paradoxical blend of moods. On the one hand, the step-by-step approach they are taking marks a retreat from past sloganeering. Buoyed by their street rebellion against Israeli rule, Palestinians once confidently predicted that an independent state in the West Bank and Gaza Strip was just a stone’s throw away. Now, independence, if it comes, must await a testing period of self-rule under Israeli control.

In contrast with the sober goals stands a surprising level of faith in the process of negotiation, at least as shepherded by Washington.

“We are equal with the Israelis now. We appeal directly to the United States, who we believe will base its actions on international principles,” Husseini declared.

This is a sharp turnabout for the Palestinians, who used to express mistrust of every American move. In contrast, it has recently been the Israelis who suspect Washington’s intentions. Just before the opening of the Madrid conference, Defense Minister Moshe Arens expressed disbelief that Washington would take an “evenhanded” position in the talks rather than favor Israel, its democratic ally.

In any event, the Palestinians are trying to suppress a sense that things might go their way, and they consider it the first order of business upon their arrival home today to muffle a local surge of optimism.

“We face a challenge,” said Husseini, head of the Palestinian delegation. “We need to control the high expectations of Palestinian public opinion.”

Those expectations, reflected in unusual street demonstrations of support last week, are a kind of trap for Husseini and the others who have risked their standing--and some say their lives--on the outcome of talks.

By giving de facto recognition to the Jewish state, the Palestinians expect to get a state of their own, even if through a slow approach. Anything short of that will be considered a fiasco. In the unstable world of Palestinian politics, association with a fiasco inevitably brings charges of betrayal.

“There is opposition to us being here. I think that after this first round, there is less opposition. But the part of it that remains is more extreme,” Husseini admitted.

Husseini headed the “guidance committee” that oversaw the work of the Palestinian negotiating team. The committee represented a link with the PLO, which was excluded by Israel from direct participation in the proceedings.

PLO factions are at odds over the wisdom of the talks. In the view of some, the West Bank and Gaza delegation has usurped the leading role of the PLO and compromised its maximum demand for “liberation” of all of what was once Palestine.

In the West Bank and Gaza, street fights have erupted over the talks, and participants in the talks have been threatened with violence.

Husseini argued that Arafat, the mercurial PLO chieftain, favors the talks because of their possible results, even though he himself may never sit face to face with the Israelis. “I don’t know when Yasser Arafat will come to the table, but I am sure that in 1995 he will have a Palestinian passport,” Husseini predicted.

In Madrid, the Palestinians appeared content with the first phase of the conference. The down-to-business talks with the Israelis are expected to resume within two weeks, although neither Israel nor the Arab delegations--Syria, Lebanon, Jordan and the Palestinians--have agreed on where.

The Palestinians claim to have reaped the same benefit that the Israelis wanted to win at the peace conference: de facto recognition. Although their delegation was formally linked with Jordan’s, the Palestinians believe they achieved equality with the other delegations.

“The Israelis no longer can say we don’t exist,” Husseini said. “Simply, we were there, sitting face to face with them.”

Prospects for gains in the next round are less clear. At their talks with Israel, the Palestinians drew up a list of measures they consider the key to easing tensions, including a freeze on the construction of Israeli settlements in the West Bank and Gaza, the release of prisoners and the withdrawal of troops from towns and cities. They also put forward their demand for eventual statehood.

The positions were greeted with the riposte of “stop dreaming” from chief Israeli negotiator Elyakim Rubinstein, the Palestinians said.

“They were tough. They want to dictate to us, but then we expected that,” said Saeb Erakat, an editor of a Palestinian newspaper in Jerusalem who attended the session.