On NBC's Meet The Press last Sunday, Donald Rumsfeld was asked if he thought Yasser Arafat was a terrorist. "It's not for me to characterize him," said the Defence Secretary circumspectly, "but if one looks historically, he has been involved in terrorist activities."

That "Chairman" Arafat was a terrorist is not in doubt. The more important question is whether he's capable of being anything else. And the answer to that, too, is not in doubt. Under the terms of the Oslo "peace process," he has been a head of government -- not of a sovereign state, but of an embryo state. The "Palestinian Authority" is not a viable entity in and of itself, being merely selective areas of Israel's "occupied territories," but within it "the Palestinians" had, give or take, the same degree of autonomy that the Province of Quebec does today or the Irish Free State did in 1922. Arafat had an opportunity to demonstrate he was capable of governing -- in matters of law and order, health, education, the economy. Had he done so, the movement toward a fully-fledged Palestinian state would have been unstoppable. He didn't have to be perfect. The expectations in the reformed-terrorist category are not high -- Jomo Kenyatta, Robert Mugabe -- but Arafat has failed to make even this minimal grade. His Palestinian Authority is a swamp of corruption and organized crime presided over by trigger-happy goon squads from the Chairman's dozen competing state security agencies. If you gave this guy Switzerland to run, he'd turn it into a sewer.

At one level, this is a crisis for Israel: As George Will noted in yesterday's Post, more of their citizens have died from terrorism in the eight years of the "peace process" than in the 45 years before. But, in a more profound sense, Arafatism is a crisis for the Palestinians: If their cause remains mortgaged to the Chairman, their prospects of any kind of viable future are precisely zero. The Palestinians' problem is not Israel: Last year at Camp David, Ehud Barak, schmoozed out of his tree by Clinton, offered Arafat over 90% of the West Bank and the Gaza Strip and part of Jerusalem. Nor is the Palestinians' problem Washington: President Bush has come out in favour of a Palestinian state. Rather, the Palestinians' problem is Yasser Arafat, his stunted lieutenants and their dark subsidiaries. Invited to choose between building a country or killing Jews, they choose Jew-killing. Every time.

That's why last weekend's carnage usefully clarified the situation. Once upon a time, professional Arab armies were prepared to fight for Palestine. Unfortunately, they kept losing. (Not to be mean-spirited but Arab armies are among the lousiest in the world, at least since King Hussein sacked Sir John Glubb in the Fifties.) So they contracted the job out to the PLO who in the Seventies waged a campaign of vicious but targeted terrorism. Then came the Eighties and the intifada, in which the new front-line warriors were rock-throwing nine-year olds. And now it's down to suicide bombers detonating themselves in shopping malls for the glory of killing kids and pregnant women -- the final stage of Palestinian nationalism's descent into nihilism. What other once credible liberation movement has so willingly embraced such awesome, total self-degradation?

Arafat has been successful only in one particular: landing Israel with the blame for the situation and persuading the Arabist romantics in the West to frame the debate entirely in his terms. I see even Anton La Guardia in Monday's National Post wrote "the Palestinians are a stateless people." In fact, there is a Palestinian state: it's called Jordan, whose population has always been majority Palestinian. It's not as big a state as it used to be, but that's because King Hussein, in the worst miscalculation of his long bravura high wire act, made the mistake of joining Nasser's 1967 war to destroy Israel. Hence, the "occupied territories": they're occupied because the Arabs attacked Israel and lost. And, unlike, say, Alsace-Lorraine or Hong Kong, Israel uniquely is prevented from returning the occupied territories to the guys they occupied 'em from. The West Bank cannot be given back to Jordan, because in 1974 the Arab League declared Arafat's PLO to be the "sole legitimate representative of the Palestinian people," an impressive claim for an organization only five years old.

The Arabs did this to punish King Hussein because they were steamed at him for sitting out their 1973 war against Israel. That's a perfectly good reason from their point of view, but what's amazing is that they've talked the entire world to accept their little exercise in political muscle as the only valid position on the issue. There are no analogous situations anywhere and even trying to invent one will drive you nuts: Imagine if Quebec attacked English Canada but lost and, as a result, English Canada occupied Montreal and was then instructed by the world that Montreal had to be handed over not to Quebec but to a second francophone state headed up by a, er, Haitian-born terrorist based in, um, Guadeloupe ...

The Arab League didn't take its position because it cares a fig for the Palestinian people, or indeed for Arafat: until he landed in the Palestinian Authority, he'd spent his career being booted out of one Arab state and on to the next. The League chose to fetishize the PLO because the "Palestinian problem" is more useful to them than its resolution would ever be. Since the collapse of the Ottoman Empire, Arab leaders have tried and failed to promote a viable, sustained pan-Arabism. Today, the only tattered remnant of the pan-Arab cause is Palestinian nationalism, and very helpful it is, too. Why, only the other day a wealthy Saudi assisted by Egyptian lieutenants and Iraqi intelligence blew a hole in the middle of New York and the world rushed forward to insist that this proved the need for a Palestinian state. For the squalid thug regimes of the region, giving the impression to their hapless peoples that they're engaged in an epic struggle with the Jews helps excuse their own failures as nation states. It costs the Arab dictators very little in blood or treasure. They have no desire to lose any more wars against Israel, and most of their financial contribution has been in the longstanding arrangement by which "taxes" are deducted from the paycheques of Palestinian workers in the Gulf and wired direct to the PLO.

The Arab League's 1974 coronation made Arafat, a pipsqueak militarily, into a political powerhouse. The UN began treating him as the leader of a sovereign nation, as if to underline his inevitability: he's already a head of state; all he needs is for those "intransigent" Israelis to give him a state to be head of. And so in 1993 Israel consented to the creation of the Palestinian Authority. For Hamas and Islamic Jihad, this offered the prospect -- since taken up with gusto -- of being able to kill Jews from within Israeli territory! But for their protector Arafat it also offered an opportunity for a little bit of what the IRA calls "internal housekeeping": Since moving into the PA from their most recent lodgings in Tunis, Arafat's boys have successfully cowed into silence or interrogated to death many of the less radical, more accommodating West Bank Palestinians who might have made the Authority a going concern. If there seem fewer alternatives to Arafat than there used to be, it's because a lot of them are six feet under.

Much of this activity has been funded by the West, which has given billions to something called PECDAR, the Palestinian Economic Council for Development And Reconstruction. Set up under the Oslo accords, PECDAR was supposed to be entirely independent of the Palestinian Authority. Instead, Arafat's gang has creamed off most of the dough either for their personal benefit or to shore up their police state. One of the biggest changes in the West Bank post-Oslo is that, even as ordinary Palestinians' economic prospects have withered, you see a lot more local officials riding around in Mercs. Meanwhile, the schools teach children about the heroics of the suicide-bombers and in geography class Israel has been literally wiped off the maps. Whether or not a second Palestinian state is desirable, it's perfectly obvious that this particular second Palestinian state is not in the least bit so, and after last weekend there's no reason for Israel to pretend otherwise.

Nor for America: In an interesting development, the U.S. yesterday proposed Jordanian troops act as "international observers" in the West Bank. Symbolically, that would be the most serious challenge to Arafat's monopoly on the Palestinian cause in 27 years.