AS Palestinian delegates prepare for a new round of negotiations with Israel, they are finding that the peace process is fueling political and personal rivalries - and complicating the Palestinians' first steps toward open political activity.Within only a few weeks of their launch, the peace talks are forcing changes both in the relationship between Palestinian leaders inside and outside the occupied territories, and among internal leaders themselves, as factions and individuals try to bolster their own positions. Throughout the occupied territories, proponents and opponents of the peace process have been staging demonstrations and debates that the Israeli authorities have been hesitant to interrupt, offering an unprecedented opportunity for political organization and activity. The Israeli tolerance follows years of banning political activity in the occupied West Bank and Gaza Strip. "We want to exploit the peace process to start open political activity," says Palestinian journalist Ziad Ali Abu Zayyad. "We want to create facts on the ground in front of the Israelis that are public and far from underground." The bilateral negotiations in Washington may launch negotiations on future Palestinian self-rule. "And now that power is perceptibly within peoples' grasp, there is something worth fighting about," says a Western diplomat in Jerusalem. At the heart of the fight are a number of "political committees," set up in the occupied territories during the Madrid conference by two prominent Palestinians, Mr. Abu Zayyad and university lecturer Sari Nusseibeh. Made up of some 200 people associated with Palestine Liberation Organization Chairman Yasser Arafat's mainstream "Fatah" faction, the creation of the committees disconcerted members of the Palestinian delegation to Madrid when they returned home. The surprise announcement of the committees also angered leaders of other PLO groups, such as the communist "People's Party" and the Democratic Front for the Liberation of Palestine. Abu Zayyad insists that the committees are designed to support the Palestinian negotiating team. "We decided there must be an open channel between the people and the leadership," he says. "The committees' role is to tell the delegation what the people want, and to explain to the people what is happening in the [talks]." But he also foresees a more specific future for the committees. "The mainstream [within the PLO] needs an organized public body to function on a political level," he argues. "This is a step on the way to forming a political party ... and it will not be open to any other faction." That attitude has prompted fears among other PLO groups that the committees are a Fatah scheme to wrest the political initiative from them, in a preemptive bid for whatever power will be transferred from Israel under self-rule arrangements. "The problem is," complains a PLO official at the organization's headquarters in Tunis, "that this could lead to internal Palestinian frictions, and that there are competing wings within Fatah." Opponents of the new committees argue that it is premature to be fighting for political advantage, and that any grass-roots organizations in the territories should be a national initiative. "The committees should reflect the balance of power on the ground," argues Ghassan al-Khattib, a member of the Palestinian negotiating team. "It is true that Fatah is the biggest group, but there should be good representation of people who are not members of any tendency, since they are the majority." Mr. Nusseibeh is rethinking the makeup of the political committees in light of the controversy. But critical to their future is the attitude of the PLO leadership in Tunis. Mr. Arafat himself is said by officials close to him to favor the creation of some sort of public organization in the territories, as a foundation to underpin Palestinian demands for a governing authority during the envisaged five-year transition period before agreement is reached on the territories' final status. Such committees could also serve to strengthen his own personal authority over the residents of the West Bank and Gaza Strip, if they were structured in a way to ensure his control over them. At the same time, committees run by the PLO would help give it the organizational edge over rival groups such as the Islamic fundamentalist "Hamas" movement in any elections of an interim authority in the territories. But the PLO's role in organizing above-ground structures in the territories is a delicate issue. With the launch of negotiations between Israel and Palestinian residents in the West Bank and Gaza Strip, "there is no doubt that the decisionmaking weight has shifted to the occupied territories, the PLO cannot ignore that," says Jamil Hilal, the PLO spokesman in Tunis. "It has to give the leaders inside the territories a bigger say, but at the same time make sure that the PLO institutions inside and outside act as one unit and remain on top," he adds.