Egypt Leads Fund Raising for PLO Among Arab States : Mideast: Drive faces diplomatic hurdles. Secret talks with Israel, PLO support for Iraq in Gulf War irked some nations.

Egypt has launched a behind-the-scenes campaign to persuade the wealthy Persian Gulf states that have shunned the Palestine Liberation Organization since the Gulf War to open their pocketbooks again, even as the PLO’s secret autonomy talks have left it perilously isolated from Arabs who have formed the backbone of confrontation with Israel.

As Jordan, Syria and Lebanon expressed increasing dismay over the PLO’s talks toward gaining early autonomy for Palestinians in Jericho and the Gaza Strip, there are growing indications that Arab Gulf states such as Saudi Arabia and Kuwait--unflinchingly hostile to the PLO since its support for Iraq during the Gulf War--may now be reconsidering.

“The PLO is changing to the point where it is making it possible for people to support it,” a Gulf official close to the peace talks said Thursday. “The whole dynamics in the region are changing, and the wall between the Gulf states and the PLO is crumbling just like the wall between the U.S. and the PLO is crumbling--and the wall between Israel and the PLO.”

Egyptian President Hosni Mubarak, pressing a diplomatic effort on the Gulf financing issue, telephoned Saudi Arabia’s King Fahd and the United Arab Emirates’ Sheik Zayed ibn Sultan al Nuhayan during a Cairo visit this week by PLO Chairman Yasser Arafat.

The PLO says it needs $50 million immediately to keep its offices running around the world and to begin building an administration in the occupied territories. Thereafter, it says, it will require aid near the $2-billion to $3-billion-a-year levels allocated by the United States to Egypt and Israel.

“Unless there is immediate blood in the vein, the life of this agreement will be very short,” Mohammed Subieh, secretary general of the Palestine National Council, said Thursday.

But he said the PLO expects the money to come from the United States, Europe and Japan, in addition to the Gulf states. He added that the PLO, with new momentum from the West on its side, is no longer prepared to beg from the Gulf states. “We don’t want to ask the Gulf,” Subieh said. “We have done all we can. . . . It is up to them.”

One Egyptian official noted: “We are trying to convince Saudi Arabia, the (United Arab) Emirates and even Kuwait. I believe there are signs of welcome. . . . It’s a totally new situation now, which makes it possible to imagine a fresh beginning in the relationship between Palestinians and the Gulf.”

Such an agreement, if reached, would be a major breakthrough in inter-Arab relations, badly soured since the Gulf War’s end. The loss of Gulf financial support--prompted by Arafat’s backing of Iraq when it invaded Kuwait--was a key factor in forcing the PLO to the peace table.

Yet the PLO, while opening a possible new channel to the Gulf, also risks its alliance with Arab partners in Jordan, Syria and Lebanon; they are unhappy at being left in the dark about its secret contacts with Israel.

Some of these front-line Arab states, which had pledged not to conclude separate deals with Israel until Jerusalem reached a long-term solution with the Palestinians, now are reported ready to speed their own deals. That would leave the Palestinians in the lurch when it comes time to negotiate Israel’s withdrawal from the rest of the West Bank and Jerusalem.

Arab sources said they believe it likely that Jordan will soon sign a draft agenda to make final its peace talks with Israel; Syria is also reported near a peace accord with Israel.

The back-channel talks, which appear poised to lead to mutual recognition between the PLO and Israel and early autonomy for Gaza and Jericho, also pose problems for other Arab regimes. Their own political legitimacy rests, in part, on solidarity with Palestinians.

In an interview published by Amman’s state-run news agency, Jordan’s King Hussein observed: “We are not against the Palestinian-Israeli agreement. We support the Palestinian decision and I would go further and praise the Palestinian courage in taking this decision and blessing what serves the Palestinian interest.”

Jordan would be the existing nation most affected by the Palestinian agreement:

* Palestinians deserting an economically sinking region on the West Bank would undoubtedly flood as new refugees into Jordan.

* The future of the Jordanian monarchy could be imperiled if Palestinians, who already hold a slight majority in the tiny country, should dominate.

* Jordan holds a precarious position with the West. It recently managed to restore most U.S. aid, cut off after it supported Iraq during the Gulf War, by positioning itself as a key player in the peace process. The unilateral agreement could indicate that the Palestinians can be delivered without Jordan’s help.

“Jordan feels secure as long as it has a role in the solution of the Palestinian problem,” one Arab official said. “When the Palestinian problem is solved, based on its own merits, there are the fears that Jordan becomes insignificant.”