NEW YORK As the prospect of an international conference on the Arab-Israeli dispute becomes increasingly likely, both the Bush administration and the government of Prime Minister Ariel Sharon face coming to terms with a Palestinian leader they can neither abide nor avoid. . What is it about Yasser Arafat that makes him so troubling to the United States and Israel? In fact, the problem is not the man himself, as Sharon and President George W. Bush seem to think, but the political position of the Palestinians in the Arab world today. . Despite their recent calls for democratic institutions for the Palestinians, American officials' disquiet about Arafat does not seem to be caused by concern about the corrupt and authoritarian regime he installed in the Palestinian Authority. After all, Arafat merely mimics the governments of many of America's closest allies in the Middle East. . Arafat's problem - and that of all who contend with him - is that he is expected to be a statesman without a state, an inevitably two-sided position. . Sometimes he takes on the demeanor of his counterparts among the Arab rulers, deferential to the international norms and interests that contribute to keeping him in power, and sometimes he adopts the role of an opposition, railing against the same international norms and interests that also deprive him of the status the rulers enjoy. . He has negotiated for his people, but he is also associated with militant protest that grasps for power without negotiation. . This two-sidedness reflects the nature of politics in the Arab world, where there are two powerful forces: the ruling circles on the inside and the economic and political arrangements at the margin. . Over five decades, Arab rulers hijacked nationalist aspirations and suppressed independent economic activities and politics. Helped by exceptional external revenues - foreign aid, oil income, loans - they built extensive states while neglecting domestic concerns like education and social welfare. Now these states seem muscle-bound, paralyzed by their own overreaching and by their centralized organization. . Outside their influence, ill-educated, underemployed young people produced by their negligent social policy constitute the backbone of informal economies that sustain millions of officially unemployed. . From the street vendors in the cities to the migrants looking for a future in London, Marseille, Hamburg and Kabul, millions of young Arabs have embraced globalization with an enthusiasm - or desperation - that far outstripped the commitment of their governments. . And this group also provides the recruiting ground for political groups operating outside governmental control and across borders - every militia, guerrilla group and armed salvation front from Lebanon to Algeria, Palestine to Sudan. . Meanwhile, the rulers draw on increasingly narrow pools of talent - family, military insiders, cronies - to manage governments with little public orientation. . Since the moment of his election as the chairman of the Palestinian Authority, Arafat has given every indication of wanting to join the ranks of the Arab rulers. He shows no aspirations to be an institutional innovator. For better or worse, he seems to have taken the negligent despotism of his colleagues among the Arab regimes as his model. . But the other Arab rulers have states to rule. In this crucial respect, Arafat (like all potential Palestinian leaders) has less in common with the Arab rulers whom he wants to emulate than with the disenfranchised who make their living outside the established states, sustained by the networks of informal economies that respect no national boundaries. . In his frustration with an international system that has failed to deliver what it promised, Arafat represents the forsaken in the Arab world. Without a stake in the system, neither he nor the region's other outsiders have enough to lose to prefer negotiation over resistance. . If the Bush administration and the Sharon government succeed in bypassing Arafat, they will find nothing but more Arafats behind him, for the problem is not the person but the position. . The writer, dean of Columbia University's School of International and Public Affairs, contributed this comment to The New York Times