One of the authority's main responsibilities was to police the Palestinian territories, cracking down on militant groups and stopping terrorist attacks against Israelis. Israeli officials say the authority failed in its most important task, as evidenced by the mounting death toll -- 928 Israelis and more than 2,400 Palestinians -- during the 41-month-old Palestinian uprising. Palestinians say the authority was put in the untenable position of being the security subcontractor for Israel at the same time that Jewish settlements were expanding in areas slated for eventual Palestinian control.

Palestinian analysts accused Israel of contributing to the authority's problems by refusing to deal with Arafat, withholding tax revenues and strangling the Palestinian economy with closures and curfews. Palestinian officials also faulted the United States.

"They want to create weakness in the Palestinian people and the PA until they accept hard concessions, but it is a very dangerous game," said Ahmed Ghnaim, a prominent West Bank member of Arafat's Fatah political movement. "Here's the risk: No one knows the ability of the structure to continue this way."

Gideon Meir, a senior spokesman for Israel's Foreign Ministry, denied that Israel was pushing the Palestinian Authority toward collapse. "We have an interest in a strong Palestinian economy. We don't want it to collapse and have the burden fall on ourselves" for providing essential services in the West Bank and Gaza Strip, he said.

Khalil Shikaki, a Palestinian pollster and political analyst, said the main reason the authority has held together is its position as the largest employer in the territories. "The PA is still in existence only because it is able to pay salaries to 140,000 public sector employees in the civil service and security forces," he said. "When you pay 140,000 people a month, your existence is in the interest of a lot of people."

But the authority's grip is weakening, analysts and officials said. Palestinian Economic Minister Maher Masri said earlier this month that the agency probably would not have enough funds to pay February salaries. It recently sold its 35 percent stake in the local Jawal cell phone company to raise $43 million to pay employees.

The Palestinian Authority, which spent about $1.1 million last year, ended 2003 with a $350 million deficit, according to figures compiled by the Finance Ministry and international monitoring groups. Of the nearly $590 million Palestinian officials requested from donor nations, the authority received less than half -- about $230 million.

French prosecutors recently revealed that they were investigating whether Arafat's wife, Suha Arafat, who resides in Paris, improperly received more than $10 million in authority funds. The International Monetary Fund said in a report issued last fall that more than $900 million in public funds were "diverted" to Israeli private bank accounts controlled by Arafat and his financial adviser or to other uses for which the IMF said it could find no full accounting.

A European Union finance official said the EU was withholding a $50 million payment to the Palestinian Authority until it stopped paying security officers in cash, a practice that has created huge slush funds. Israel also refused to hand over to the Palestinians more than $180 million in tax revenues it collected in 2001 and 2002; Israeli courts ordered the funds frozen pending judgments in multiple lawsuits filed by Israelis against the Palestinian Authority seeking damages for terrorist attacks.

The United States has threatened to withhold about $200 million in funding provided by the U.S. Agency for International Development to nongovernmental agencies and private contractors for programs in the Palestinian territories. None of that money is allocated directly to the Palestinian Authority.

U.S., Israeli and Palestinian officials say they fear a collapse of the Palestinian Authority could result in a violent power struggle among remnants of Palestinian security agencies, crime bosses, Islamic militants and others.

Arafat's Fatah movement -- the political backbone of the Palestinian Authority -- has begun losing its once solid grip on key political and social institutions within Palestinian society. Three weeks ago, a gunfight erupted inside the Gaza City police headquarters between officers under Arafat's appointed police chief and security forces aligned with former Palestinian security chief Mohammed Dahlan, now an Arafat rival. One police officer was killed and 11 others were wounded.

"What has begun to be more visible is the beginning of the breakdown of law and order," said Karen Abu Zayd, deputy commissioner general for the U.N. Relief and Works Agency in the Gaza Strip. "All the groups have their own militias, and they are very organized. It's factions trying to exercise their powers."

Other conflicts are being waged on the political front. The Islamic Resistance Movement, or Hamas, has long challenged the Palestinian Authority in the Gaza Strip by providing residents with a wide range of social services. Now it is also eroding the Fatah movement's control over a large network of influential student, worker and professional unions across the West Bank and Gaza. Hamas and other militant organizations have seized total or majority control of student governing bodies at major universities in the West Bank, wresting from Fatah the loyalty of an important segment of the next generation of Palestinian leaders.

Fatah's Revolutionary Council, a critical decision-making body, met last week for the first time in three years. The meeting reportedly erupted into shouting matches several times over Arafat's failure to control the growing lawlessness on the streets of Palestinian cities and his refusal to hold internal party elections, which many members say believe would give younger Palestinians a greater voice in Fatah.

Some Palestinians have begun arguing that the Palestinian Authority should dissolve itself, saying that such a move would force Israel to assume the full burden of its occupation of the West Bank and Gaza Strip.

"I think the Palestinian Authority should push the button" and disband itself, said Ali Jerbawi, a political science professor at Ramallah's Birzeit University. The authority has no political strategy for combating the Israelis, Jerbawi said, and dissolving itself could help it regain the initiative by forcing Israel to "bear the consequences" of occupation.

The International Committee of the Red Cross in November canceled an 18-month, $36 million food distribution program in the West Bank. The program, which provided assistance to 50,000 families or about 300,000 people, was not stopped for budgetary reasons, according to spokesman Iyad Nasser, but because "it is the responsibility of the occupying power to ensure that the civilian population under occupation live a normal life and have access to food, health, education -- to the basics."

Staff writer Glenn Kessler in Washington, special correspondent Nimer Awine in Bethlehem and researchers Samuel Sockol and Sufian Taha in Jerusalem contributed to this report.

Palestinians protest Israel's barrier through and around the West Bank, where the Palestinian Authority is seen as becoming less effective. (Muhammed Muheisen -- AP)

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