RIYADH, Saudi Arabia -- As the United States searches for a new formula for Arab-Israeli peace talks, Saudi Arabia and other Arab states have begun to search for Palestinian leaders from within the Israeli-occupied territories at the expense of the Palestine Liberation Organization.
The Arab states seek to punish PLO Chairman Yasser Arafat for his support of Iraq but also to maintain their demands for an Israeli withdrawal from the West Bank and Gaza Strip and for the establishment of an independent Palestinian state.
"On paper, Saudi Arabia has made it very plain that its stand on the Palestinian issue has not changed and that it has to do with principles, not personalities," a Saudi official said. "We will not try in any way to try to depose Arafat. But I have a feeling the focus will be more on leaders in the West Bank and Gaza Strip."
Mr. Arafat may pay a steep price for having sided with Iraq. Until the invasion of Kuwait, the Persian Gulf states accepted the PLO and Mr. Arafat as the only legitimate spokesmen for Palestinians, gave the organization millions of dollars and generally allowed the PLO to set the Arab world's agenda with Israel.
But the invasion and Iraq's military defeat by the U.S.-led coalition strengthened Mr. Arafat's critics -- especially Syrian President Hafez el Assad -- and damaged relations between the PLO and its chief financial backers, Saudi Arabia and Kuwait.
Saudi officials and intellectuals insist that the PLO will not be forgiven. They also suggest that Saudi Arabia will be less insistent that Israel meet the PLO's demand for the creation of an independent Palestinian state.
"Let them give certain rights to the Palestinian people, but maybe the Palestinians shouldn't expect immediate recognition as a state," said Othman al-Rawaf, a political scientist at King Saud University. "I think few intellectuals in the region think their governments are going to go back and deal with the Palestinian leadership as if nothing happened."
For Palestinian families, the PLO's stance during the war aggravated what was already a disaster. Thousands of Palestinians in the gulf lost their jobs and were forced to return to the households they helped support in Jordan or the occupied territories.
Arab governments, meanwhile, may place more pressure on the PLO by restricting its money. Gulf states levy a 5 percent tax on the salaries of Palestinians working in their countries and, until now, gave the PLO a veto over how the money was spent.
"People here realize they should support the Palestinians directly, not through the PLO," a member of the Saudi royal family said. "There's criticism about how the PLO runs its house."
One telling sign of the organization's loss of power was a meeting last week in Damascus between several Arab foreign ministers and Palestinians supported by Syria and opposed to Mr. Arafat.
Kuwait's foreign minister, Sabah al-Ahmad al-Jaber al-Sabah, said after the meeting that "a lack of confidence" ruled out reconciliation with the PLO.