DESPITE Israeli determination to keep the Palestine Liberation Organization out of the Middle East peace conference, PLO officials insist they are making the political decisions for the negotiating team in Madrid.Even though the Israelis have threatened to walk out of the talks if the PLO presence is overt, it is clear that the PLO has been in close contact with the delegates, and that it is handling the logistics for the delegation. From the moment the delegation members started their trip to Madrid last weekend, leaving their homes in the Israeli-occupied territories, the PLO appeared to be in charge. PLO officials met the delegation at the bridge that connects Israel and Jordan and took them to the Plaza Hotel in Amman, where the PLO leadership was already installed. The PLO has provided bodyguards and administrative staff for the delegation in Amman and now in Madrid. PLO Chairman Yasser Arafat is said to be supervising the operation himself, taking care of even the most minor details. A senior PLO official says Mr. Arafat insisted that the leader of the Palestinian delegation have a separate car from the chief of the Jordanian team in Madrid, even though the Palestinians and the Jordanians are technically part of the same delegation. Two cars awaited the leaders of the joint Jordanian-Palestinian delegation when they arrived in Spain. "It is not a matter of whether the PLO wants be involved or not, but the PLO is ... the government that will remain in charge [of everything from] political decisions to the very tiny details of accomodation and travel arrangements for the delegation," says one PLO official, who was in Amman to receive the delegation. In recent press statements Arafat has tried to create the impression that the Palestinian delegates will be operating independently from the organization. "I will accept whatever the Palestinian leaders in Madrid accept," he told Cable News Network over the weekend. Arafat was neither relinquishing his role nor was he was lying. His statement is part of the ongoing game of words that the organization and the Palestinian delegation are playing - abiding by the rules of the conference while protecting the PLO's role in the process. In effect, all the parties involved are caught up in this game, including the United States. In late September this reporter was present at a PLO office in Tunis when an Egyptian official called PLO leaders with a request. The Egyptian, who cannot be named, wanted the organization to allow Palestinian negotiator Hanan Ashrawi to meet with US Secretary of State James Baker III in Amman just before the September meeting of the Palestinian National Council in Algiers. The Egyptians were highly supportive of Mr. Baker's diplomatic efforts before the peace conference. The meeting between Baker and Ms . Ashrawi indeed took place. Palestinian delegate Saeb Erekat, who declared last week that the Palestinian delegation was in fact a "PLO delegation," prompted harsh warnings that Israel might refuse to sit in a conference room with him. But Israeli delegates sat across from Mr. Erekat in Madrid yesterday morning for the opening speeches of the conference. Erekat even wore a black and white kaffiyeh - a symbol of the Palestinian cause, and virtually a PLO emblem. Palestinian delegates are still saying they are under the control of the organization. "Our negotiating position is based on the Palestinian strategy endorsed by the legitimate and legislative institutions of the PLO," says Dr. Ghassan al-Khatib, a member of the Palestinian delegation. Furthermore, PLO officials assert that even if the delegates are not "formal" members of the PLO, as Israeli stipulations demanded, they are an integral part of the organization. Palestinian analysts point out that the very composition of the delegation makes it part of the PLO. Except for four or five delegates, who represent traditional groups, the majority of the delagates are leaders of grassroots organizations and unions that constitute the backbone of the PLO political base in the Israeli-occupied territories.