SALAAM, salaam, salaam. Over backgammon boards in coffee shops, peppering newspaper editorials every morning, and in family arguments over the dinner table, "peace" is the word on Palestinian lips in the West Bank and Gaza Strip.But scarcely anyone in the territories Israel has occupied since 1967 believes that peace will be the outcome of the Middle East talks that open in Madrid Wednesday. Among a population wearied by years of false promises and dashed hopes, opinion on the US-brokered negotiations is divided between those who believe they are bound to be futile and merit only a Palestinian boycott, and those who argue that even though they are futile, Palestinians have no choice but to join in. "Peace conference? What peace conference?" spat grandmother Farha Rabah as she stepped from the bus in her home village of Kobar after visiting a jailed son on Tuesday. "This is a surrender conference." Hers was the view - albeit a minority one - expressed in the day-long strike to protest the peace talks called in the territories Wednesday by radical factions of the Palestine Liberation Organization (PLO) and Islamic fundamentalists. But few Palestinians are hopeful of the outcome. "I have no faith that the conference will lead to good results for us, but I think we should go just to see what happens," said Hussein Sharif, a neighbor of Mrs. Rabah's. "People are reacting on two levels," explains Ziad abu Zayad, a prominent Palestinian journalist in East Jerusalem. "On the emotional level, they are suspicious, afraid, hesitant. They are not sure what is happening, they don't trust the Americans or the Israelis, and they don't think anything will come out of the peace conference. "At the same time," he adds, "they are not against the peace conference itself, and most people think that if things don't get any better, at least they won't get any worse" if Palestinians attend the talks. Palestinians base their pessimism on several grounds: that the Israelis refuse to withdraw from the occupied territories, that the Arab and Israeli negotiating stands are irreconcilably divided, and that past experience has taught Palestinians that the world does not care enough about their cause. At the same time, many feel the conference offers an opportunity that would be foolish to pass up. "Even if there is no chance of success, we should not refuse to go," argues Hassan Hamid, a student from Gaza at Bir Zeit University. "We have to test the credibility of the United States, to see whether they will implement the UN resolutions." United Nations resolutions 242 and 338 call for an Israeli withdrawal from the occupied territories and self-determination for the Palestinians. The US supports these resolutions. Opponents of the conference argue that the terms of Palestinian participation are too humiliating: The PLO is not directly involved in the talks. Nor do they think the Palestinians will achieve any of their goals in the talks. m against the conference, because it won't give us any of our rights, not Jerusalem, not a state, not a return of the refugees," says Tahrir Bargouti, a bottling plant worker in Ramallah. Some opponents of the talks have issued threats against the Palestinians named to participate in them. "We are going to pressure the people who are going to attend; we are going to make their lives a nightmare," warns Riyad Malki, associated with the radical Popular Front for the Liberation of Palestine. Others suggest that the PLO's decision to join the talks could endanger its unity. "Why does the PLO represent us?" asks Mr. Bargouti. "Because it defends our rights. If it sits with the Israelis and gives our rights away, maybe other groups will come up." Meanwhile, Palestinians wait to see what happens in Madrid. "No one is against peace," says Sheikh Laham, slapping down a counter on a backgammon board outside his Jalazoon coffee shop. "But we want real peace, with self-determination and a state for the Palestinians. If peace gives people justice, it is real. If it takes justice away, it is not."