The PLO may be about to regain its unity under the leadership of Yasser Arafat. After having tried unsuccessfully to get rid of Mr. Arafat, Syrian President Hafez Assad is expected to embrace him once again.
Algeria has played a crucial role in welding the broken parts of the Palestine Liberation Organization together.
Only a few weeks ago, most experts considered a PLO badly battered by the Israelis and the Syrians in Lebanon to be ''finished.''
Arab diplomats, both friendly and hostile to Arafat, gave him no chance whatsoever to bounce back from the Tripoli disaster. When under fire from pro-Syrian dissidents, he and the remnant of his forces were forced to leave Lebanon.
At the meeting of the National Council of the Palestine Resistance Movement (the Palestinian parliament) expected to convene in Algiers next month, most Palestinian groups are expected to mend fences and to annoint Arafat as the top leader once more, according to well-placed sources. PLO fighter Abu Musa, who led last year's mutiny against Arafat in Lebanon, is expected to fall into line.
''Essentially, this means that Syria's Assad and the PLO's Arafat will strike a deal and compromise with one another,'' says an informed Arab diplomat.
As he and other Arab diplomats see it, this is what happened:
* With the exception of Libya, the Arab world refused to follow Assad in his attempt to finish off Arafat. The nonaligned nations and the Soviet Union also pleaded Arafat's cause behind the scenes in Damascus.
* The vast majority of 2.5 million Palestinians who live in Jordan and on the West Bank remain faithful to Arafat and his faction, Al-Fatah.
* After Tripoli, Arafat played his cards skillfully. His trip to Cairo worried Syria, which was concerned that the PLO would come under Egyptian domination. In Jordan with King Hussein, again Arafat had the Syrians worried that he would transfer PLO headquarters to Amman. Yet he did not overplay his hand by actually giving Hussein a go-ahead for negotiations with Israel regarding the West Bank.
* At the same time, Assad's triumph in Lebanon considerably strengthened his position as a leading player on the Middle East scene.
''It means that a stalemate has developed between Assad and Arafat,'' says an old Arab hand.
''Assad has found out that the Damascus wing of the PLO alone lacks credibility and legitimacy in the eyes of the Arab world. Arafat has found out that for political and geographic reasons the PLO, without Syrian support, is irrelevant.
''Tunis is too far removed from the West Bank. Jordan and Lebanon do not provide solid bases for the PLO from which to operate.''
Algerian President Chadli Benjedid has been active behind the scenes to build bridges between Arafat and Assad, and between the PLO factions. Talks among Palestinian leaders based in Damascus and Tunis have recently taken place in Tunis and in Aden.
PLO ''Foreign Minister'' Farouk Khaddoumi has flown between Tunis and Damascus in recent weeks. While loyal to Arafat, he remains on talking terms with high-level Syrian officials.
At this point an agreement over a common political platform is in sight, even though ''both sides are still engaged in hard bargaining,'' says one Arab ambassador.
Two things are at stake. The first is the degree of political independence of a newly united, Damascus-based PLO vis-a-vis Syria.
Also at issue is the freedom of action that Arafat personally will enjoy. He is expected to have collective leadership and less room to maneuver than in the past.
''Politically, the reunited PLO will cling to the Fez (Arab summit) meeting, which mentioned the right to exist of all the states in the region (including Israel, even though not mentioned by name) in exchange for the return to the Arabs of all territory taken away from them since 1967,'' says a source close to the PLO.