The Arabic countries all weighed in when various US guys have done their tours, Cheney and Powell. There was a lot of "How can you do Iraq when there's this bigger problem right over here?" I don't think they actually care that much about Hussein; after all, he's Persian.
As far as Arafat rejecting a second-rate deal,
HAW
Arafat can't accept any deal. As the two-bit leader of a tiny little country, he's a non-entity; as the two-bit leader of the violent front representing the hopes and dreams of 600 million Arabs, he has enormous power. That's why he carefully arranges his headgear draped over his right shoulder into the shape of the entire region, including Israel; the symbolic message to his homies is that he wants it all.
Plus, at this point, if Arafat were to accept the deal that was offered, he'd be the goat to that 51% -- and possibly be strung up by them.
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