The agreement with Israel on limited Palestinian autonomy in the Occupied Territories signed last September in Washington has strained the unity of the PLO to breaking point. Senior officials have broken ranks and sided with opponents of the deal, while loyalists who supported the accord have been alienated by Arafat's haphazard and autocratic style of leadership.
Under siege, amid continuing calls for greater democracy and collective decision-making, Arafat is facing one of the toughest tests in his more than 20 years as the PLO's chairman.
The "old man" (as he has long since been called) has seen off challenges to his leadership in the past. But this time round he is under assault from all sides. The accord with Israel provoked a wave of resignations from the ruling Executive Committee. The leading Palestinian poet, Mahmoud Darwish, quit before the agreement was signed.
The organisation's veteran representative in Lebanon, Shafiq al Hout, suspended his membership and later stepped down. Representatives from rejectionist factions - the Democratic Front, the Popular Front and the Arab Liberation Front - all jumped ship, leaving a reduced Executive Committee, with only 12 out of the original 18 members.
For the many of the revolutionary old guard of the PLO, the dream is over. "The PLO, which was established in 1964, is now finished," says a bitter Abdullah Hourani, the head of the PLO's cultural department. Hourani, one of the senior figures who stepped down from the Executive Committee, accused Arafat of forgetting about the Palestinians who became refugees when Israel was created in 1948.
"I will not get my right to go back to my homeland. I will not get my right to self-determination, my right to have my own independent state. This agreement closed the door to these aims of the Palestinians," argues Hourani, who fled his home town of Haifa after the creation of Israel in 1948.
Senior PLO figures who expressed reservations about the agreement have been slowly edged out by Arafat, who will not tolerate any dissent. Among the casualties are two of the founding members of the mainstream PLO Fateh faction, the Al Hassan brothers, Khaled and Hani. Khaled al Hassan, an elder statesman of the PLO, was absent from the arguments in Tunis on the accord with Israel as he was in Morocco, convalescing from a heart operation.
Hani al Hassan invoked Arafat's ire by his vocal opposition within Fateh and was elbowed out as one of the faction's members on the PLO's interim parliament, the Central Council. When he turned up for a crucial meeting in October, during which the Council approved the self-rule deal, Al Hassan was refused entry. His seat on the Council, together with those of three other critics, were filled by Arafat loyalists.
More worrying for the PLO leader is the rise of a significant movement of protest against him from Palestinians from both inside and outside the Occupied Territories, who have supported the peace deal. Arafat's dictatorial and secretive leanings have risen at the same pace as growing dissent, and now even former loyalists are questioning his leadership.
Few want to see Arafat replaced as head of the PLO since no-one serves as such a powerful symbol. But many believe that key decisions about the future of the Palestinian cause can no longer be left up to one man.
The crisis has been brought to a head by preparations for the transfer of authority to the Palestinians in the Gaza Strip and Jericho in the West Bank. The delay in the start of the Israeli withdrawal, originally scheduled for 13 December, came as something of a blessing to the PLO, which was in no way prepared to assume the running of the Territories.
Crucial decisions on the composition of the Palestinian National Authority to be set up have been delayed time and time again as PLO officials and Palestinians from the Territories compete for posts. The only firm appointment is that of Arafat himself as head of the authority. The fear is that the PLO leader will try to pack the authority with his cronies so as to have the same control over a future administration as he has over the PLO.
Nowhere is this more apparent than in the choice of members for the Economic Council for Development and Reconstruction which will manage the millions of dollars pledged in international assistance for Gaza and Jericho.
Arafat is used to controlling the purse strings of the PLO, and wanted to ensure he is in charge of the aid for the Palestinian administration.
Thus it came as no surprise that Arafat should name himself head of the 60-seat Council, with politicians rather than economic professionals filling most of the other posts. The appointments exasperated both professionals and Western donors, who have insisted that the Council be independent of internal political considerations. For the World Bank, it is indispensable that the PLO "creates a credible autonomous economic institution and does not play to the political structure."
As a sign of the malaise, the leading Palestinian economist, Youssef Sayigh, resigned from the Council in despair at Arafat's blatant intention to pack the body with political appointees, rather than qualified technocrats. Despite attempts to woo him back on board, Sayigh has remained ambivalent about the Council.
Arafat's idiosyncratic leadership and use of patronage in handing out posts on the new Palestinian bodies has served to alienate even his closest supporters. The architect of the agreement with Israel, Mahmoud Abbas, is for all intent and purpose no longer on speaking terms with his chief.
Abbas, commonly known as Abu Mazen, signed the Washington agreement, but he has since been marginalised in negotiations with Israel. He made his displeasure clear in December by boycotting Executive Committee meetings and later leaving for Rabat in the week when the PLO was involved in delicate discussions with Israel on resolving differences blocking the implementation of the autonomy accord.
Other former Arafat loyalists on the Executive Committee have also made grumbling noises, such as PLO spokesman, Yasser Abd Rabbo, and the leader of the Palestinian People's Party, Suleiman Najjab. The two boycotted an executive meeting in December, in protest at Arafat's failure to consult other officials before making key decisions in negotiations with Israel.
"It is useless to attend these meetings, whose resolutions are totally ignored by the chairman of the Executive Committee," said Najjab at the time. The discontent in Tunis has been aggravated by Arafat's prolonged absences. The PLO leader has always shown a penchant for travel and his newly-found respectability has enabled him to visit capitals which were out of bounds in the past. It has also enabled him to escape from the pressures in Tunis.
Officials complain Arafat has been absent from headquarters at a time when he should be sitting down to work out the details of the new Palestinian bodies to take over from the Israel administration in Gaza and Jericho. Under pressure from both Executive Committee and Fateh members, Arafat recently agreed to give up sole control of the negotiations with Israel by setting up a committee to oversee the talks.
But this manoeuvre failed to persuade members that Arafat had really changed his stance. Abu Mazen turned down an offer to head the committee, perhaps knowing that the old man would find a way to circumvent it.
Similarly, officials have been working at drawing up a constitution for the new Palestinian authority. But while critics see this as a way of reining in Arafat, the PLO leader favours a presidential system in which he would have wide-ranging powers.
"The mind of the revolution is very different from the mind of the state," Abu Mazen told a meeting of the PLO Central Council last October. "We must all put on new robes and think with new minds if we are to build this state."
There are few signs that Arafat has absorbed the message in Abu Mazen's words. The PLO leader has traded in his image as a terrorist in the eyes of the West for one of international statesman, but the emperor's new clothes have not changed the habits of a lifetime.