In 16 months, Arafat hasn’t left the dusty compound even once. Though Israeli officials say he’s now free to go, they won’t guarantee his right to return. So Arafat confines his existence to an austere office, a small mosque on the first floor and a meeting hall he gets to by crossing an elevated walkway. When his designated prime minister, Mahmoud Abbas, better known as Abu Mazen, walked out of a stormy meeting last month, Arafat went after him but had to stop in the courtyard and watch his deputy drive away. “He’s a strong man, but this isolation has weakened him,” says Mamdoh Nofal, who serves as an adviser to Arafat and visits him regularly.

Arafat must recognize the painful irony of his position. With the fighting in Iraq now over, the United States and Europe have turned their attention to finding a solution to the long and bitter struggle between the Palestinians and Israelis. It is not only a crucial foreign-policy issue–especially to British Prime Minister Tony Blair–but paramount to any Western attempt to reform the Middle East. Last week Washington released its long-awaited Roadmap, a phased, three-year peace plan that culminates with the creation of a Palestinian state. And yet at this signal moment, when the longtime leader and symbol of the Palestinian cause should be standing center stage, Arafat finds himself being pushed behind the curtain.

The grizzled resistance leader has lost some of his authority; neither the U.S. nor the Israeli government will deal with Arafat anymore, and he’s been forced to cede control of key Palestinian Authority functions (including security and finance) to a new, more pragmatic group, led by Abu Mazen. At 74, Arafat has not been completely emasculated–he’s still the crafty leader of the Palestinian movement. But Israel’s efforts to sideline him have proved much more effective than many people expected. “It wouldn’t be an exaggeration to say that domestically and internationally, he’s at his weakest point in decades,” says a Western diplomat who still calls on Arafat in Ramallah.

The tough Israeli measures have hurt Arafat partly because they’ve been accepted by the Bush administration. It was only last September that American officials were pressing Sharon to tread easier on Arafat. Now some people in Washington view regime change in the Palestinian territories as the natural follow-up to Afghanistan and Iraq. Interestingly, Arafat has accepted the Roadmap for reviving peace talks, while Israeli Prime Minister Ariel Sharon has reservations. Indeed, Arafat has already met some of the U.S. demands, including deep financial reforms. But Washington is determined to work with Abu Mazen alone, which could provoke a backlash from the man who still views himself as the one and only true voice of the Palestinian people. “What we’re getting for the first time is a separation between Arafat and the Palestinian cause,” says Mark Heller, a political scientist at the Jaffe Center for Strategic Studies in Tel Aviv.

Even novice watchers of the Middle East know it’s folly to bet on Arafat’s demise. The Palestinian leader has come back from defeat on so many occasions, he defies the laws of probability. Though Arafat’s approval rating among Palestinians is down to about 30 percent, he still enjoys the standing of a founding father. Even critics say he might be the only leader who can rally Palestinians to accept compromises with Israel. This time, though, the forces and circumstances arrayed against him are overwhelming. They include not just Sharon and George W. Bush, but the fallout from September 11 and the implications of the Iraq war. And there’s the matter of his age. If Sharon’s hawkish government lasts out its term, and it probably will, Arafat will be 78 before Israelis go to the polls again.

Does Arafat realize that his time may be past? Or will these seeming setbacks only spur him to try to reassert his relevance to the Palestinian cause? Arafat’s advisers say that he would gladly trade his power and position for a real Palestinian state in all of the West Bank and Gaza Strip, including East Jerusalem. That, in some ways, is the essence of the new peace effort by the U.S. government, which has concluded that Arafat is not the man to institute meaningful Palestinian reform.

Some U.S. officials believe that Arafat just wants to hang on, and would scuttle the Roadmap if he thought it would help boost his status. While Arafat and Abu Mazen wrangled last month over appointments to the new cabinet, the U.S. State Department pressed a message on Europeans who were mediating. Said an aide to U.S. Secretary of State Colin Powell: “The secretary in all his phone calls to the Europeans was telling them, ‘You have got to tell Arafat that if he fouls this one up, it’s the end of your relationship with him.’ And the Europeans were quite clear about that.” According to the State Department aide, Washington’s big worry is that even a weakened Arafat “has the power to screw things up.”

Arafat has always been tough to read. Nofal, the Palestinian adviser, says Arafat can cry at will and then yell at an underling, all within seconds. Yossi Beilin, a former Israeli Justice minister and an unswerving peacenik, says the Palestinian leader is the product of his generation’s heroes–Fidel Castro, Gamal Abdel Nasser and Mao Zedong. “Arafat modeled himself after them, considered himself to be one of their number,” says Beilin, explaining Arafat’s signature fatigues and ubiquitous sidearm. And, he adds, Arafat’s mind-set hasn’t changed. Beilin, who calls Arafat neither a peacemaker nor a terrorist, asserts that Arafat’s strong-arm tactics within the PLO, and his willingness to use violence to advance his cause, were probably the reasons Palestinians succeeded in getting their plight on the international agenda in the 1970s.

Thirty years later, in the aftermath of the September 11 attacks, Palestinian violence has had the opposite effect. For the most part, say analysts, it has harmed their cause. Last week a suicide bomber killed three people at a Tel Aviv pub just hours after Abu Mazen was approved as prime minister. Drawing less attention–and criticism–was the fact that Israeli soldiers killed 16 Palestinians in raids on Gaza the very next day. “September 11 reduced the tolerance for any terrorism at all,” says Heller, the political scientist. “I think Arafat has been slow to understand that.” Four months after the September 11 attacks on New York and Washington, Israel nabbed a Palestinian arms shipment thought to have been sent from Iran. The affair damaged Arafat’s relationship with the United States irrevocably.

The big question is how much leverage Arafat still has with the armed militia groups. With Arafat isolated in the West Bank, Hamas is increasingly a power center of its own in Gaza. Last week, following the Israeli incursion in Gaza, both Hamas and the Al Aqsa Martyrs Brigades spurned pleas from Abu Mazen to lay down their weapons and vowed to carry on the armed struggle. If Abu Mazen decides to disarm the groups by force, he’s not likely to get Arafat’s support. The day Arafat swore in his new prime minister last week, he also signed an order for the creation of a national-security –council with himself as its chairman. Analysts saw it as a signal to the prime minister that dealing with the militias remains Arafat’s domain.

Arafat has always tried to hoard power and bully his opponents. Some Palestinian historians say that approach was a must in the early days of his movement to prevent Arab states from taking over the PLO and using it to further their own ends. But, critics say, Arafat’s preoccupation with his status gradually became counterproductive, starting with his return to Gaza nine years ago to head a real Palestinian government. “He can’t tolerate criticism, especially if his own name is invoked,” says Abdel Jawad Saleh, a legislator from Ramallah.

Those who’ve attempted to change, or rein in, Arafat sometimes pay a price. In 1999 Saleh circulated a petition with 19 other politicians and academics denouncing Arafat for corruption in the Palestinian Authority. A short time later, while protesting outside a Jericho prison, Saleh was summoned to the compound and beaten by members of Arafat’s intelligence service.

Arafat’s defenders say such incidents occur without the Palestinian leader’s knowledge. In fact, establishing what Arafat knows and what he doesn’t, what he initiates and what’s done without his consent, has been a formidable challenge for diplomats. Sharon says Arafat is responsible for all the violence, including attacks perpetrated by opposition groups like Hamas and Islamic Jihad. But Arafat denies knowledge of even the bombings carried out by his own Fatah group.

If Sharon had his way, he’d oust Arafat from the Muqataa and send him abroad. In Israel’s Defense Ministry, officials have prepared contingency plans for raiding his compound and putting Arafat on a helicopter, NEWSWEEK has learned. But Washington opposes the idea of deportation, and Sharon has so far complied with the U.S. position.

Instead, Sharon hopes to disable Arafat with a thousand minor cuts. Last week he pledged to shun foreign dignitaries who visit the Palestinian leader. Arafat got a brief lift during his tussle with Abu Mazen over the formation of the new Palestinian government. European and Arab officials who hadn’t spoken to the Palestinian leader in months were calling him every day, pressing him to compromise. But Sharon hit back when members of the quartet–the United States, the European Union, the United Nations and Russia–went to Ramallah to deliver the Roadmap last week. He insisted it be handed to Abu Mazen and his staff, not Arafat.

Beilin, the former Justice minister, argues that such antics are a mistake for Israel and the United States. He thinks shunning Arafat will make it impossible for Abu Mazen to operate without being viewed as an American and Israeli puppet. Arafat is “still the only person capable of granting legitimacy to a peace agreement” between Israelis and Palestinians, adds Beilin. “On the day that Abu Mazen seeks to sign a final-status –agreement with Israel, he will need Arafat’s signature, too, in order to secure the consent of the Palestinian people.” Most Israelis bought that argument when the Oslo peace process began 10 years ago. But after 31 months of fighting, it’s now very much a minority viewpoint.

By all accounts, it’s one that Arafat continues to share. Aides say that despite having turned over many day-to-day operations of the Palestinian Authority to Abu Mazen, he sticks to a rigid routine, beginning with breakfast at 9 a.m. with advisers. “He hates to eat alone,” says Mohammed a-Daya, Arafat’s longtime bodyguard. “If no one else is around, he’ll ask us to join him.” The Palestinian leader goes over papers and holds meetings until noon, then prays at the mosque and sleeps in the afternoon. After the siesta, he usually works late into the night.