When Yasser Arafat became a founder of the Palestinian Liberation Organization in the mid 1960s, only a small percentage of the world's population even recognized the existence of a Palestinian people. Traumatized by the loss of their homes, the more than 800,000 Arabs who had fled the war and Israeli underground movements (identified by some as terrorist groups) led by Menachem Begin and Yitzhak Shamir were encouraged by the leaders of surrounding states to see themselves as part of the "Great Arab nation" and to imagine that Egypt's Gamal Abdel Nasser would provide them with redemption. Arafat's group, the PLO, argued that the liberation of these refugees would be the work of the people themselves, and that they could not depend upon surrounding Arab states, who had already betrayed their Arab brothers and sisters in Palestine by failing to send significant military support during what the Israelis called the War of Independence and the Arabs called Al Naqba, the Great Disaster of 1948.
When Israel decisively defeated Nasser in 1967 and took possession of the Gaza Strip and the West Bank, and then, ignoring the pleas of many Israeli leaders and visionaries, continued to occupy these areas and encouraged Jewish settlers to create outposts in the midst of Arab land, Arafat's PLO raised the cry of the occupied and became the articulator of a growing new national consciousness of the Palestinian people.
Like most liberation struggles against colonial occupiers, Arafat's PLO adopted the path of violent struggle, using terrorism which had traditionally been the weapon of the weak and those who have no army of their own. But for several decades Arafat was unable to recognize that his opponent was not a traditional colonial power, but a state filled with Jewish refugees, a majority of them refugees from Islamic countries where they had perceived themselves to be endangered and oppressed. Israel itself had been a first attempt at affirmative action on a global scale, created through the vote of the United Nations in the wake of a monumental genocide that had killed one third of the Jewish people and left the other two thirds so traumatized and fearful of non-Jews that they demanded the right to build in their ancient homeland a specifically Jewish state and were given international sanction to do so.
Arafat's blindness to the nature of his enemy and oppressor accounts for the particular failure of his mission. On the one hand, he was a charismatic leader who was able to unify the Palestinian people enough to allow them to emerge into world history as a genuine independent entity, and then to convince the world of their right to a state of their own. Contrast that with the Kurds or Tibetan Buddhists or many others and you get a sense of the monumental political accomplishments of the PLO under the leadership of Arafat.
Nor was this suspicion without foundation. There is evidence that Arafat himself ordered specific acts of murder and terror, acts for which he would have earned life in prison had he been captured and tried (Israel had long ago abolished the death penalty). Even after signing the Oslo Accords, Arafat did little to use the power he had been given by Israel to govern the Occupied Territories to eliminate terrorist groups within Palestinian society who intended to continue the armed struggle against Israel. The dichotomy between his public pronouncements in English in which he affirmed peace and his pronouncements in Arabic in which he reaffirmed the need for struggle and Jihad (which he claimed had no necessary violent intent, but knew that it would be heard as inciting violence by many in the Palestinian world), his unwillingness to confront the Palestinian fantasy of a "right of return" and say clearly to his own people that they would have to recognize that the Israeli people were never going to give Palestinians the ability to reclaim their lost homes or land, his inability to embrace non-violence in principle (not just as a momentary tactic but as a principled way to challenge occupation), his failure to use the Camp David negotiations with Barak in 2000 in a constructive way to articulate clearly what would be the terms that Palestinians would accept as "enough," his failure to whole-heartedly embrace the Geneva Accord even when it was negotiated by his lieutenant Yassir Abed Rabbo with former Israeli Minister of Justice Yossi Beilin--all of these were ways in which Arafat was a monumental mis-leader of his people, pulling them into dead-ends that perpetuated their suffering and gave solace to the most Right-wing elements in Israel.