Palestinian Tries to Fill Dialogue Gap. MIDEAST NEGOTIATIONS

FAISAL HUSSEINI may yet help bridge the gap between Israel and the Palestine Liberation Organization. But the noted activist is newly aware of the constraints on political initiatives by Palestinians in the West Bank and Gaza Strip. Mr. Husseini was criticized by the PLO recently for failing to qualify adequately his cautious welcome of Israeli proposals for the occupied lands.

Husseini still seeks a dialogue between local Palestinians and Israel. In a recent interview, he outlined a process that he hopes would satisfy Israel and the PLO.

The Israeli proposals, authored by Defense Minister Yitzhak Rabin, call for elections of a local leadership for the occupied territories, with whom Israel would then deal.

Husseini is willing to entertain the idea of elections, but would have the winners refer Israel to the PLO. Since Israel refuses to deal with that organization, the PLO could in turn appoint the elected Palestinians as part of its delegation to talks on the territories. Thus the elections, he said, could serve as a ``ladder'' to bring Israel to talks with the PLO.

One snag to holding elections is Palestinian insistence that Israeli troops withdraw first. PLO spokesman Ahmad Abdel Rahman asserted that ``this is not only the PLO position, it is the Palestinian position.''

Husseini had not insisted on a withdrawal in his earlier positive reaction to the Rabin plan. But after calls for clarification, he said his demand for ``free and democratic elections'' meant they could not be held under occupation.

Husseini himself would be a likely candidate in any election. His nationalist credentials are impeccable. He is a member of a leading Palestinian family and his father, Abdel Kader Husseini, was a war hero, killed as he led Arab forces in the 1948 Arab-Israeli conflict.

Husseini was a student activist during his college days in Cairo in the 1960s and later joined the PLO, underwent military training in Syria, and became an officer in the ``Palestine Liberation Army.'' After the 1967 Arab-Israeli war, he returned to his native Jerusalem. He was jailed for a year after two submachine guns were found in his home.

Since then, Husseini has publicly dissociated himself from terrorism and devoted his energies to political and organizational work, including joint protest action with Israeli peace groups, and public dialogues with prominent Israelis.

Husseini is affiliated with the mainstream Al-Fatah group in the PLO. He is also recognized by radical sections and the Muslim religious establishment.

Husseini was freed from jail on Jan. 29, after a long period of detention without trial. His release was a signal that Mr. Rabin was prepared to begin a dialogue with a local Palestinian leadership. But Husseini made it clear that he was not about to upstage the PLO.

``Don't think that Faisal Husseini or anyone else can give you an alternative leadership to the PLO,'' he told Israeli peace activists - in Hebrew - last week.

``We will give you 100 Nelson Mandelas, but not a single Quisling,'' Husseini added. ``If you want negotiations, you must go to the PLO.''

Husseini dismissed Rabin's call for a period of calm, and said Israel should begin talks immediately with the PLO.

On the ground, the uprising has not abated, and waves of violent protest continue to sweep both the West Bank and Gaza.

Other prominent Palestinians have said that there could be no end to the intifadah until Israel announced its readiness to withdraw from the territories, or at least eased its tough measures to put down the unrest. This would include no more demolition of houses, release of Palestinian prisoners, and allowing deported Palestinians to return home.

In the meantime, Rabin is sticking to his proposals, urging that they be adopted as government policy, if only to counter the mounting international criticism of Israel's crackdown against the uprising. A United States State Department report last week cited Israel for violating human rights in combatting the intifadah.

Rabin's aides have raised his ideas in a series of recent meetings with Palestinians, and the defense minister himself spoke with jailed Palestinian activists during a visit this week to the Ketziot detention camp in the Negev desert.

Without Palestinian agreement, however, there is little chance that Rabin's proposals can be implemented. Prime Minister Yitzhak Shamir, who recently raised the possibility of a withdrawal of Israeli troops from Palestinian cities, says he will present new ideas for a solution during his visit next month to Washington.