NEWS ANALYSIS : In Palestinian Territories, Arafat Is Losing Ground : Mideast: The PLO leader faces criticism from all sides. That has Israel worried about his ability to keep control.

In both the Gaza Strip, where he now resides, and the West Bank, where he hopes one day to rule, PLO leader Yasser Arafat’s political fortunes are in a state of steep decline.

Even within Fatah, his own faction of the Palestine Liberation Organization, Arafat faces increasingly harsh criticism for his handling of negotiations with Israel and his running of the Palestinian Authority in the Gaza Strip and Jericho.

Arafat is being blamed for everything from Israel’s repeated closure of the territories to a recent outbreak of cholera in the Gaza Strip. About 60 cases of the highly infectious disease were reported this month before doctors in Gaza finally declared Monday that it was under control.

“People do expect too much of Arafat,” said Amin Makbool, a member of the Fatah Higher Committee for the West Bank, in an interview in Nablus. “The situation is hard, and people expect more than he can deliver. The nature of the revolution meant that we had to depend on the sole decision of the leader. Now, we need also the input of institutions, which we still lack. So everything has to go back to the leader, and he’s only human. He makes mistakes.”

Watching nervously from the sidelines is the Israeli government--concerned that the man they are making peace with may not be able to maintain his grip on Palestinian society.

“The Palestinian Authority’s ability to manage properly the Gaza Strip is very important to us,” said Ephraim Sneh, Israel’s minister of health and a former head of the civil administration in the West Bank. “We definitely want them to succeed, because their failure is the victory of Hamas.”

Hamas, a militant Islamic group, is Arafat’s strongest opposition.

Seeking to illustrate that he still controls the PLO’s most important institution, Arafat announced last week that, for the first time, the PLO’s 15-member Executive Committee will meet in Gaza.

But within days, eight members declared that they will not attend the session, scheduled for today. The Executive Committee is the supreme governing body of the PLO, bringing together the various factions. It has been largely inactive since Arafat moved to Gaza in July and formed a governing authority there to run daily life.

Among those who say they will stay away from today’s meeting are two veteran Fatah leaders--Farouk Kaddoumi, Arafat’s de facto minister of foreign affairs, and Mahmoud Abbas, a founding member of Fatah who oversaw the PLO’s secret negotiations with Israel that led to the Oslo accords. They continue to run offices in Tunis, the capital of Tunisia--Arafat’s former headquarters--and refuse to move to the territories.

But Arafat’s troubles are not confined to disgruntled officials living outside the territories. In the West Bank, Arafat was faced 10 days ago with the first elections to local Fatah councils, organized without his support.

During Israel’s occupation, Fatah councils, always appointed by Arafat, provided clandestine, grass-roots support for the faction. The councils recruited members, disbursed funds and carried out activities in the territories. A year ago, after Israel and the PLO declared mutual recognition, Fatah activity in the West Bank and Gaza became legal. Local activists soon began to say that Arafat’s method of appointing loyalists was outmoded, that Fatah needed to elect councils that could transform the guerrilla faction into a political party.

So Fatah activists in the West Bank organized elections. The first was held in Ramallah. It produced two elected councils. Reformers in Fatah hailed the development as the first step toward democratizing the faction and reshaping its mission.

Arafat, however, sent no congratulations to the new councils. And this week, Fatah announced the “postponement” of other elections scheduled across the West Bank. The reason given was technical difficulties. But sources within Fatah said that Arafat was displeased with the elections in Ramallah, where many former prisoners known to oppose him gained seats on the two councils.

Even as he faces problems within Fatah, Arafat also is edging closer to confrontation with Islamic militants in Gaza.

On Monday, Arafat ordered his police force to arrest more leaders of the extremist Islamic Jihad group and to ban public demonstrations. The edict on demonstrations forced Jihad to scale down a march planned for Monday afternoon. Under the watchful eyes of hundreds of Palestinian police, militants mourned the death of Hisham Hamad, a 21-year-old suicide bomber who pedaled his explosives-laden bicycle into an Israeli checkpoint in Gaza on Friday.

Palestinian officials have had enough of Jihad’s public muscle-flexing. On Friday, Jihad called thousands of supporters into the street to mourn the death of Hani Abed, a Jihad activist killed in a car bombing in southern Gaza on Nov. 2. Their march began shortly before Hamad blew himself up along with three Israeli reserve army officers.

Jihad said that Hamad’s attack was revenge for Abed’s death--for which they blame the Israelis. Sprinkled throughout the mourners at Friday’s demonstration were young men wearing white sheets--symbolizing their willingness to become martyrs by carrying out suicide attacks--and masked men who fired Kalashnikov rifles into the air and chanted slogans against Israel, the United States and Arafat.

Arafat continues to make overtures to the militants, however. Last week, he appointed two Hamas supporters as members of the religious courts in Gaza and the West Bank, and he has met with political leaders of Hamas and Islamic Jihad. He is trying to walk an increasingly fine line, his supporters say, between drawing Islamic militants and their supporters into the political process and preventing their military wings from destroying his fragile negotiations with Israel.