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Long before the tortuous, on-again, off-again negotiations of the final weeks, the changing situation in the Middle East had been pushing the U.S. toward a dialogue with the P.L.O. Shultz had repeatedly carried his American peace plan around the region in his own version of shuttle diplomacy last spring. The centerpiece of the plan was an end to Israeli occupation of Gaza and the West Bank, creation of an undefined "homeland" for Palestinians, and an international conference at which negotiations to achieve these ends would begin. But each effort ran up against Israeli objections to a conference even before any answer could be found to the question of who should speak for the Palestinians.
The U.S. and Israel had hoped that Jordan's King Hussein would fill this role. But last July the King announced that he would no longer assume any legal or administrative responsibility for Arabs living in the occupied West Bank. Shultz conceded that when he had invited moderate Palestinians to meet with him in the past, no one had shown up. Insisted a Palestinian representative at the U.N.: "He finally came to the conclusion that the P.L.O. is the only interlocutor for the Palestinians."
Meanwhile, the yearlong uprising by the occupants of the West Bank and Gaza had drawn worldwide sympathy for those Arafat called "the children of the stones." The best way to exploit that sentiment and further isolate Israel was for the P.L.O. to move toward a more moderate, reasonable role. Arafat was strongly urged to do so by Egypt's President Hosni Mubarak, Jordan's King Hussein and, after the cease-fire in the Iran-Iraq war, Iraqi President Saddam Hussein. For the U.S., which sharply criticized Israel's heavy use of force against the intifadeh, an overly close relationship with Israel became a liability in its relations with nearly every other nation.
The P.L.O. took advantage of the uprising when its national council convened in Algiers on Nov. 12 by unilaterally declaring the existence of an independent Palestinian state. For the first time, a council statement also accepted U.N. Security Council Resolution 242, which calls for withdrawal of all forces from lands occupied after the 1967 Arab-Israeli war and implies a recognition of Israel. It endorsed Resolution 338 as well, urging all relevant parties to negotiate.
Still, the statement was deliberately drawn to be ambiguous enough to prevent a walkout by George Habash and Nayef Hawatmeh, two of the P.L.O.'s more radical leaders. Shultz declared that the P.L.O. wording was not clear enough on Israel's existence and did not flatly rule out all forms of terrorism.
Sweden's Foreign Minister Sten Andersson moved quietly to bridge the Shultz- Arafat breach. He had visited Israel in March, seen the violence there close up, and discussed the situation personally with Shultz on a Washington visit in April. Shultz did not explicitly say he wanted the Swedes to act as intermediaries, "but I can read thoughts," Andersson joked last week.