WHEN Palestinians observed the first anniversary of their uprising against Israel one year ago, their mood was ebullient. Their long quest to cast off Israel's 22-year occupation of the West Bank and Gaza Strip was the focus of world attention. A diplomatic breakthrough, the first step toward a hoped-for Palestinian state, seemed near. One year later the jubilation is gone.
The rebellion led by stone-throwing youths has evolved into a grueling, indecisive war of attrition which Israeli troops have failed to crush and Palestinians have failed to escalate.
Hopes for a diplomatic solution to the Israeli-Palestinian conflict are fading, even though Israel and the PLO have now given conditional approval to a US plan leading to an Israeli-Palestinian dialogue.
The grim realization has set in that translating civil resistance into an end to Israeli occupation will require years, not months, and more of the kind of human and economic sacrifices that have already left nearly 600 Arabs dead and the Palestinian standard of living cut nearly in half.
``Both sides have their authority in the territories,'' says a West Bank merchant of the standoff that now exists between the ``shadow'' government of the Palestinian uprising leadership and the Israeli occupation administration, backed by the blunt force of Israeli arms. ``It's very complicated to live in the middle.''
The Palestinian intifadah (uprising) began in Gaza on Dec. 8, 1987, following the death of four Palestinians in a road accident with an Israeli Army jeep.
The protest demonstrations that followed, which quickly spread to the West Bank, catalyzed years of pent-up hostility toward the occupation and revived the fortunes of the Tunis-based Palestine Liberation Organization (PLO), which speaks for West Bank and Gaza Palestinians. Two years later, the battle between Palestinians and Israelis remains inconclusive.
Although the massive street demonstrations common during the first year have given way to more subtle forms of resistance, including the nonpayment of taxes, the intensity of the intifadah has not diminished. The number of Palestinians shot dead by Israeli soldiers this year is higher than the first year total of 277, according to the Israeli human rights group B'Tselem.
On the other hand, Israelis have grown accustomed to the uprising - despite economic and military costs running into the hundreds of millions of dollars annually - and have disengaged emotionally from the daily intifadah-related deaths and injuries.
``Israel has a high threshold for the difficult, unpleasant, and ambiguous,'' explains Harry Wall, Israel director of the Anti-Defamation League.
Moreover, after two years of rebellion, Palestinians are showing signs of discord and fatigue. Divisions among supporters of factions of the PLO and Hamas - the main Muslim fundamentalist organization in the territories - have widened over basic issues, such as whether to escalate the uprising by using firearms, how to deal with alleged collaborators, and whether to give diplomacy a chance.
Palestinians insist they hold no illusions about the strength of their adversary.
``The intifadah has taught us that we are dealing with a very determined and very stubborn enemy,'' says Raja Shehada, a West Bank attorney and founder of the Palestinian human rights group Al Haq.
But Mr. Shehadeh and other Palestinians argue - and few Israelis disagree - that the uprising has permanently altered the status quo that has existed since 1967. Never again will the Jewish state rule the territories without substantial political, moral, and economic cost.
``Even if the intifadah stops today, we have come a long, long way,'' says a West Bank journalist, who describes the intifadah as a ``gestation period'' that will precede genuine independence. ``Israelis used to think of Palestinians as mere shepherds. Now they treat us with more respect.''
So far, Palestinians can point only to such intangibles as greater respect and a stronger sense of political identity as the payoff for two years of struggle and sacrifice. More concrete achievements will depend on whether the conflict can be transferred from the back streets to the bargaining table.
The intifadah forced the PLO to take the diplomatic initiative by recognizing Israel, renouncing terrorism, and opting to settle for a ``two-state'' solution.
The concessions drew the United States into a dialogue with the PLO one year ago and prompted Israel last May to float its first peace initiative aimed directly at Palestinians rather than Arab states acting on their behalf.
But even though the structure for a settlement is in place, the violence of the intifadah and the brutality of Israel's methods of quashing it have redoubled fear and hatred on both sides - now the biggest obstacle to compromise and negotiation.
As a prominent diplomatic analyst notes, both sides have evolved toward each other without either instilling confidence in the other's good intentions.
``Even though the diplomatic gap between the two sides has narrowed, the psychological gap between them is probably wider and deeper now than ever before,'' explains Dominique Moisi, a senior fellow at the Institute for International Studies in Paris.
One result is that opinion polls in Israel show a shift to the right, buttressing the no-compromise position of Israeli Prime Minister Yitzhak Shamir.
Meanwhile, the weakness of the US-PLO dialogue, which Palestinians once believed would be the springboard to peace talks, is illustrated by Washington's talking to Egypt, not to the PLO directly, about PLO conditions for Israeli-Palestinian dialogue.
Amid political and diplomatic stalemate, Israelis and Palestinians disagree on which side will be forced to throw in the towel first.
Israel's defense minister, Yitzhak Rabin, says Palestinians are ``suffering'' and thus desperate to get a diplomatic process started. He equates efforts to subdue the intifadah with Israel's seven-year, open-ended commitment to prevent terrorist infiltrations across its border with Lebanon.
``No one asks how long you fight terrorism,'' Mr. Rabin said in a recent interview. ``[The intifadah] is a war of attrition and we can withstand it if it goes on for another year or two years, or years after that.''
But the cost of suppressing resistance in places like Beit Sahur - the West Bank town that recently fought against paying taxes to the occupation authorities - will eventually force Israel to disengage, Palestinians insist.
``If this is going to be the price for enforcing every law, it's not a price it will be possible for [Israel] to pay over the long period, financially or morally,'' says Shehadeh.
Palestinians add that too many sacrifices have been made to turn back now. ``I know we'll get the territories,'' says a carpenter from Idna in the West Bank. ``How do I know? I have six boys and five girls. I will give half of them to the Palestinian cause.''