Declaration Delay?

It was supposed to be a banner day for the PLO Flag Shop in Gaza City. Back in July a representative from Yasir Arafat's protocol office placed an impressive order: 20,000 shiny Palestinian flags and 50,000 Arafat T shirts. Officials planned to distribute the merchandise in time to celebrate Arafat's promised declaration of Palestinian statehood on Sept. 13. But owner Tareq Abu Dayyah was cautious. He remembered when Arafat last promised to proclaim a state, in May 1999. This time, declaration or no declaration, he wanted his money up front.

Late last week the flags and shirts were still collecting dust in a Gaza warehouse. Palestinians, it seemed, would have to put their dream on hold once again. Some of Arafat's closest aides predicted that the Palestinian Central Council would vote overwhelmingly to put off the decision. Parliamentary Affairs Minister Nabil Amr said that Arafat may even delay for another year. And officials braced for angry reaction from a frustrated public. "They will say, 'Oh God, once again', " Amr told NEWSWEEK. Critics "will say, 'Look at the level of this leadership!' "

And they're not the only ones complaining. In an awkward bit of diplomacy, Arafat tried to balance the disappointment of his people by disappointing Bill Clinton too. The American president was looking to shore up his legacy with a Mideast peace settlement. But his push to restart Israeli-Palestinian peace talks was a tough slog at the U.N. Millennium Summit last week. Arafat bristled through a session with Madeleine Albright, and played "Dr. No" to Clinton's browbeating. Arafat kept insisting on complete sovereignty over East Jerusalem. The recalcitrance in New York was supposed to buy patience in Gaza. Then, as the curtain fell on the world gathering, a new Palestinian proposal emerged to keep talks alive: the disputed Temple Mount might not come under Israeli or Palestinian control, but something called Islamic sovereignty. "It's an artful dodge," a well-placed Israeli source told NEWSWEEK. So Arafat was once again treading water. But for how long?

"I can promise my son a present once, maybe twice," says Fayez Abu Hammad, who has lived all of his 48 years in a Gaza refugee camp. "But after the third time he will have no faith in me." Polls suggest the Palestinians have little faith left in Arafat. His approval ratings hover around 35 percent. About 55 percent believe he should declare a state in September, even if that means violent confrontation with Israel, but a majority also believe he won't. "The people are apathetic," says Haider Abdul Shafi, a founder of the Palestine Liberation Organization who has broken with Arafat. "Their situation is one of hopelessness bordering on complete despair."

At the PLO Flag Shop, Abu Dayyah knows all about the public mood. His flags were hot sellers in the first years after the 1993 Oslo peace accord. But since then, the novelty has worn off. The Palestinian Authority still buys quantities, but the people don't. "Nobody wants to fly a flag on top of his house when Jerusalem is still occupied and the refugees can't return," Abu Dayyah says with a shrug. "These flags are empty symbols." They're looking like just so many I.O.U.s.