Assailed by critics at home and abroad, Arafat told the Palestinian Legislative Council that he intended to reform the Palestinian Authority and hold elections.

Israel, the United States and Europe were demanding reforms that would lead to greater democratization, an end to corruption and the unification of the myriad Palestinian security forces.

This last component was seen as the most important by Israel and U.S. diplomats. Reducing the number of Palestinian security organs from more than a dozen to just a few, and centralizing their control, would lead to more effective oversight and reduce anti-Israel violence, it was believed.

Yet skeptics said that after nearly 40 years of terrorism and misrule, Arafat could not change his spots. What he would do, they warned, was to offer lip service to reform, winning praise from the international community; wait for the storm of criticism to pass while gutting the reforms of real content; and then demand Israeli concessions in exchange for his declarations.

So far, the jury is out: After three weeks there is still a lot of talk of reform, but very little progress.

No date has been set for elections, no significant action has been taken to change the Palestinian Authority's structure, and terrorism once again is escalating — primarily at the hands of the Al-Aksa Brigade of Arafat's own Fatah Party.

Arafat reportedly has decided to shrink the number of ministries in his Cabinet from 30 to 18. Yet the housecleaning is not exactly what Israel had in mind: Among those offered Cabinet posts were four terrorist groups, all of which rebuffed Arafat's offer.

Arafat met Tuesday in Ramallah with CIA Director George Tenet to discuss reforms in the Palestinian security services.

During the meeting, Arafat presented a plan that called for reducing the number of security forces by half and tightening their supervision, with Arafat retaining overall control.

The meeting came amid reports that Abdel Razak Yehiyeh, who has been involved in security talks with Israel, had been chosen to head a centralized security apparatus.

The appointment of Yehiyeh was seen as a snub of Mohammad Dahlan, who had been expected to be given that post. Dahlan has close ties with U.S. officials and is believed to have a back channel with Israel. Despite the reports regarding Yehiyeh's new position, Arafat will remain in charge of the various security forces as head of a ''supreme security council.''

Arafat likewise refuses to give up control of Palestinian Authority finances. He also is refusing to appoint a prime minister, continuing a pattern of blocking other Palestinian officials from accumulating too much power.

The result, Israeli officials warn, is that Arafat will retain the tools to continue a terrorist onslaught that is coordinated by the Palestinian Authority.

When Operation Protective Wall ended a month ago, there was a general feeling in Israel and the Palestinian Authority that something had changed. Surveying the destruction that the intifada had brought on them, many Palestinians called openly for a re-evaluation of the Palestinian Authority and the use of terror.

For a while it seemed as if there was a rare meeting of the minds between Israel and Palestinian reformers. But it took only a few days after Operation Protective Wall for Israelis to realize that there would be no change in the situation: Terrorist attacks resumed and Arafat condemned them, even while they were being carried out by his party loyalists.

Brig. Gen. Yehiam Sasson, the outgoing head of the anti-terror headquarters in the office of Israeli Prime Minister Ariel Sharon, said that the Palestinian Authority is doing nothing to prevent terror attacks. Avi Dichter, head of the Shin Bet, told the Security Cabinet that it was only thanks to Israeli efforts that as many as 40 suicide attacks had been prevented in the past few weeks.

So what motivates Arafat? First is the need to win back the support of his people. Arafat came under fierce criticism for his willingness to allow six Palestinian militants to be jailed under British and American supervision in Jericho — in return for Israel lifting its siege on his compound — and to allow the exile of 13 Palestinians from the Church of the Nativity in Bethlehem.

Second, Arafat wants to show Israelis that Operation Protective Wall, which so deeply humiliated him, has not ended terrorism.

Third, Arafat continues to believe that violence and terror are the most effective means of achieving Palestinian goals, analysts say.

Another factor seems to be Palestinian mistrust of Sharon. As Israel's anti-terror incursions into Palestinian areas have become a matter of daily routine, and as a new Jewish neighborhood is planned for eastern Jerusalem, Palestinian trust in Israeli leaders also has fallen to new lows.