Although the United Nations recognised the Palestine Liberation Organisation as the sole, legitimate representative of the Palestinian people in 1974, it wasn't until the 1987 uprisings known as the intifada that Israel began to consider Yasser Arafat and the PLO as acceptable interlocutors in a regional settlement.
Ironically, from the early days of the intifada - if not before - the PLO had begun to lose its popular support in the occupied territories. Absent from Palestine for many years, Arafat and the PLO leadership were out of touch with the sentiments of those who had lived under 20 years of occupation. The intifada was spontaneous and highly organised, but neither initiated nor controlled by the exiled PLO leadership.
So just as Arafat was being rehabilitated in Tel Aviv and Washington from a terrorist to a negotiating partner, in occupied Palestine he was losing his status as a nationalist hero, becoming instead a colluder and soon a collaborator.
The key to understanding what is now going on in the Middle East can be found in these divergent views of Arafat.
Israeli Prime Minister Ehud Barak has a clear role in mind for Arafat in what he continues to call the Oslo "peace process". The PLO chairman is to be the local cop on the beat, the guy to whom the task of keeping his less moderate nationals in line would be subcontracted.
With US backing, the challenge was to persuade Arafat to sign an agreement that would confine the Palestinian population to a small number of scattered and isolated enclaves on the West Bank and Gaza Strip - the Bantustan-style model perfected by apartheid governments in South Africa.
To satisfy nationalist aspirations, these enclaves could be called a "state", with a Palestinian capital permitted in the village of Abus Dis, on the outskirts of Jerusalem, and renamed "Al-Quds". Existing (and expanding) Israeli settlements on Palestinian land, which explicitly violate UN Security Council resolution 242 (1967), would remain.
The discontiguous tracts of land that would comprise the "state of Palestine" would be completely surrounded by territory to be annexed to Israel, which would remain in control of borders, roads, water resources and the movement of the population between them.
In effect, Palestinians would not be "granted" a sovereign state, but merely civil authority over a percentage of their land occupied since 1967.
If the Palestinian Authority is any guide, the government that will assert this authority won't be very civil, and more likely brutal, corrupt and nepotistic - but ultimately compliant to Israel's wishes. For Tel Aviv this arrangement is significantly preferable to direct Israeli rule, a lesson earlier learnt by Pretoria.
In return for the status and privileges of a presidential office, Barak demanded two things of Arafat. First, he must formally terminate all Palestinian claims against Israel. Second, the PLO head had to sell the deal to his people. Ultimately Arafat couldn't do either, and used the pretext of holy sites in Jerusalem as his escape clause.
Arafat's refusal to sign off at Camp David, and his failure to quell the latest uprising, have predictably led to threats of redemonisation and complaints about Palestinian ingratitude for the unprecedented and generous concessions on offer. Convinced of their biblically endorsed right to possession of Judea and Samaria (West Bank), Israelis believe that under this offer they are actually handing over their property.
The indigenous people see things very differently. Seven years after what they regarded as an Israeli-Arafat agreement (Oslo), Palestinians remain under military occupation. Self-rule continues to be a humiliating disaster and independence promises to bear no resemblance to the self-determination they have been promised since 1948.
The implementation of UN resolutions (242, 338 and 194), supposedly the legal basis of their property rights and the return of refugees expelled in 1948 (700,000) and 1967 (430,000), have been consistently vetoed by Israel's patron in the Security Council.
The Palestinians' ageing leaders have betrayed them for the perks of high office. Today, Palestinians insist the question of Palestine is much more than the crumbs Arafat and the PLO gratefully receive from the Israeli table. They resent being told how much of their land Israel is "generously" prepared to return to them.
Oslo demands their capitulation. Camp David was like sitting down with the thief and the police to be told by both how much of your stolen property they think you should get back.
Palestinians reject the idea that they have a moral obligation to sacrifice their land to compensate for the crimes committed by Europeans against Jews. They compare their circumstances with those enjoyed by Israeli citizens and know who the real victims are. They demand more than phoney promises and raised, but unrealised, expectations.
For Arafat, outflanked by popular hostility to the terms of a "surrender" he almost signed at Camp David, there is no way back from the ceasefire summit at Sharm el-Sheikh.
The misnamed "peace process" must be buried. He can no longer read the script written for him in Tel Aviv and Washington. Co-optation has finished.
Scott Burchill lectures in international relations at Deakin University.