THE ARAB-ISRAELI DILEMMA BEGAN AROUND 1898 WHEN THE FIRST MAJOR CONTINGENT OF JEWS CONFORMING TO ZIONIST PRINCIPLES ARRIVED IN PALESTINE. THE EXODUS OF PALESTINIAN ARABS INTO COUNTRIES SURROUNDING ISRAEL AND INTO REFUGEE CAMPS OCCURRED IN 1948, AND AN ORGANIZED PALESTINIAN POLITICAL GROUP SURFACED IN 1964 UNDER THE INFLUENCE OF GAMAL ABDEL NASSER. THERE WERE BOTH MILITARY AND POLITICAL REASONS WHY LEADERS OF THE PALESTINIAN MOVEMENT SELECTED INTERNATIONAL POLITICAL TERROR AS A STRATEGY TO ACHIEVE POLITICAL GOALS. EVENTS IN 1973 AND LATER, RELATED TO TERRORIST INCIDENTS AND OIL PRICES SET BY MIDDLE EAST COUNTRIES, DEMONSTRATED THAT LETHAL, HIGH-TECHNOLOGY WEAPONS COULD ESCALATE CONFRONTATION. ACTS OF INTERNATIONAL TERROR, BALANCED WITH POLITICAL TACTICS AMONG UNDERDEVELOPED COUNTRIES AND EXTERNAL SUPPORT FROM CERTAIN DEVELOPED COUNTRIES, HELPED THE PLO GAIN UNITED NATIONS LEGITIMACY AND WORLD RECOGNITION OF PALESTINIAN ISSUES. THE PLO HAS STATED POLITICAL ALTERNATIVES, EACH ONE SERVING THE ESTABLISHMENT OF A PALESTINIAN ENTITY, I.E., A PALESTINE WITHIN ISRAEL. IT HAS SUBGROUPS THAT USE VARIOUS FORMS OF TERROR WITH DIFFERING EFFECTS. OBJECTIVES SOUGHT THROUGH TERRORISM ARE INTERNATIONAL RECOGNITION, REGIONAL SHOW OF FORCE (ANGER AGAINST THE ISRAELI GOVERNMENT, THE MILITARY, AND THE PUBLIC), REPRISAL, HARASSMENT, THE CREATION OF A SENSE OF SHOCK, AND COERCION. TACTICS TO ACCOMPLISH THESE OBJECTIVES INCLUDE AIRLINE HIJACKINGS AND BARRICADED HOSTAGE TAKINGS, ASSAULTS AND RAIDS, BOMBINGS, LETTER BOMBING, AND KIDNAPPINGS. PALESTINIAN TERROR CONSTITUTES CONTROLLED VIOLENCE EXECUTED TO ACHIEVE SPECIFIC REGIONAL AND INTERNATIONAL POLITICAL OBJECTIVES. OPERATIONAL CAPABILITIES OF PALESTINIAN TERRORISTS ARE EXAMINED IN RELATION TO PERSONNEL, EQUIPMENT, AND INTELLIGENCE. WAYS IN WHICH PALESTINIAN ATTEMPTS TO EXPAND THEE SCOPE OF TERROR ARE NOTED, SUCH AS THREATS INVOLVING NUCLEAR, CHEMICAL, OR BIOLOGICAL WEAPONS AND THE USE OF ENERGY RESOURCES AS TERRORIST TARGETS. (DEP)