Once-Underground PLO Now Operates Openly : Mideast: Residents try to adjust as clearly marked offices sprout across occupied territories.

The sign on the office door is modest. It reads simply: “The Palestine Liberation Movement--Fatah.”

But its impact, one resident of East Jerusalem said, is as powerful as would be an office shingle in central Belfast that read “Irish Republican Army.”

Up from the underground, Palestine Liberation Organization offices and those of its mainstream movement, Fatah, are appearing across the Israeli-occupied territories, with 14 at latest count.

“Before, this was a clandestine organization, and it was chased by authorities,” said Jemal Jahjeuh, one of the East Jerusalem office’s two staffers. “Anyone who said he was Fatah could go to jail.

“Now,” he said, “we’re conducting official business.”

For the last few days, that official business has consisted largely of handling a torrent of applications from eager young men and women who want to serve in the Palestinian police force that is meant to replace the Israeli army as the keeper of order in the occupied territories.

The creation of the police force comes under the Sept. 13 Israeli-Palestinian agreement on self-rule. The accord calls for a transition period beginning in three weeks, when Palestinian authorities are scheduled to take over most civic functions.

In January, the Palestinian police are to deploy in the Gaza Strip and the West Bank town of Jericho as Israeli forces withdraw from the area. Eventually, the police force, expected to total more than 20,000 and to be trained in Jordan and Egypt, is to operate in the rest of the West Bank as well.

Jahjeuh said that as the applications stream in, preference will be given to PLO fighters and activists who have spent time in Israeli prisons and have the documents to prove it.

Othman Bakker, a 19-year-old student filling out his police application at the long table in the two-room Fatah office, said that he had never served time in prison but that he had fought on the side of the intifada , or Palestinian uprising.

Now that Palestinians are headed for self-rule, “I want very much to serve my people through keeping law and order,” he said. “I never imagined this would happen, but it did.”

Nasim Shahin, a 19-year-old secretarial student, her face framed by the trademark black-and-white-checked Fatah headdress, said she was signing up because “I don’t want the law of the jungle to rule anymore.”

“I feel very proud,” she said, “because we’re beginning to achieve the things we fought for in the intifada. “

Despite the calm atmosphere in the Jerusalem Fatah office, the legalization of the PLO on Israeli-held territory is also still only at its beginning.

Samir Jundi, a member of the PLO leadership in Jerusalem who was jailed five times between 1976 and 1990, said, “Many Palestinian people are still in prison just for being in Fatah.

“When these people are released,” he said, “that’s the first real step for Fatah to be legal.”

Even though Israel has recognized the PLO and acknowledged that it is the only realistic partner for negotiations, the habits of years of enmity and concern about the future still make many Israelis grimace at the open existence of PLO bases.

In Parliament last week, Ariel Sharon, the former defense minister, demanded the immediate closure of the PLO’s main center in East Jerusalem, known as the Orient House and newly hung with the PLO’s red, green, white and black flag.

“Close immediately the PLO headquarters in Jerusalem,” he said, “before the building turns into the temporary-permanent government house of the PLO. And don’t allow the opening of any self-rule office, or else Jerusalem will turn into the capital of the (Palestinian) autonomy.”

Palestinian leaders do not hide their ambitions to make Jerusalem--not the steamy backwater of Jericho--the capital of the Palestinian state when it is formed.

But for now, the Fatah headquarters in Jerusalem and others like it are caught up in the organizational process of turning a movement formed to strike at Israel into a constructive element of a future state.

“The role of Fatah in the future is, first, to change into a political party rather than a semi-military organization,” Jahjeuh said. “Of course, we are in need of construction now, to build here. We have the economic situation, the health situation, the whole infrastructure.”

That means, he said, that the office, which gets an amount of funding that he would not specify from the PLO, spends time these days working on who should be appointed to what new post in the coming Palestinian administrations. It also plans to fulfill semi-governmental functions in providing social services under the new order, even though Israel does not consider Jerusalem part of the new area of self-rule.

Its quiet location in a low-profile building that it shares with the Center for the Correction of Vision and a theater reflects its mundane new functions.

And where, once, word of mouth had to suffice for communication, the Fatah office launched its police recruitment drive with a simple ad in the East Jerusalem newspaper, Al Quds.

“We’re doing what any Fatah office around the world would do except for recruiting men for the struggle against Israel,” Jahjeuh said, “because we’re working in a different manner now.”