The United Nations has upgraded the status of "Palestine" from that of observer to non-voting member - one step closer to statehood - brushing aside American and Israeli objections.

Tuesday's General Assembly vote was 124 nations in favor, four against, with 10 abstaining.The only countries that sided with Israel and the United States in a futile bid to quash the resolution were Micronesia and the Marshall Islands - two Pacific archipelagoes with a combined population of 165,000 that were once little more than American colonies and are still dependent on U.S. good will.

That, if nothing else, should send a clear signal to Washington how isolated it has become in supporting the hard-line policies of Israeli Prime Minister Benjamin Netanyahu.

The Palestine Liberation Organization was granted observer status at the United Nations in 1974, when it was still branded a "terrorist" organization by Israel and its allies. That status was again upgraded in 1988 when the General Assembly designated the PLO as "Palestine."

The 1993 Oslo accord between Israel and the PLO established an autonomous Palestinian National Authority but never promised statehood, leaving that to be negotiated in "final status" talks along with other sensitive issues such as the future of Jerusalem, Jewish settlements and the Palestinians' right of return.

However, in April 1996, Israel's then-Labor-led government dropped its long-standing opposition to the creation of a Palestinian state, implying that it could be achieved after a five-year period of confidence-building envisioned in the Oslo timetable.

Unfortunately, Labor lost Israel's 1996 election, Netanyahu became prime minister and, under pressure from right-wing and ultra-Orthodox coalition partners, he began reneging on some of the commitments made by the previous government.

In December, Arab nations submitted a U.N. resolution to upgrade the Palestinian observer mission to that of non-voting member. Israel and the United States derailed it once but couldn't head it off a second time when it was resurrected last month.

U.S. Ambassador Bill Richardson called it "the wrong resolution at the wrong time," warning that it will sow further mistrust between Israel and the Palestinians and undermine U.S. efforts to achieve a compromise. Netanyahu also complained that it was a "clear violation" of the Oslo agreements because it predetermines the international standing of the Palestinians before statehood has even been addressed in final status talks with Israel.

That it does, but no more so than the actions of his own government. Expanding West Bank settlements and building new Jewish housing projects in the Arab sector of East Jerusalem predetermines their final status, too.

So far, Israel has returned seven West Bank towns, most of an eighth (Hebron) and much of the Gaza Strip to Palestinian self-rule. But the Palestinians control only 27 percent of the territory Israel captured in the Six-Day War of 1967 - the land they hope to call a state - and the Oslo timetable has slipped so badly there is no hope of concluding final status talks before the May 4, 1999, deadline.

The talks cannot even begin until Israel carries out at least one of three further troop withdrawals that were to have been completed by mid-1998. The Palestinians have accepted a U.S. compromise of 13 percent for the first redeployment, on condition it is followed by more, but Netanyahu re-fuses to go beyond 9 percent, saying it would jeopardize Is-rael's security.

Palestinian leader Yasser Arafat threatens to declare statehood next May if the impasse isn't broken. Netanyahu, in turn, threatens to annex large tracts of the West Bank, leaving the Palestinians with one-fifth of the state they wanted. And both sides are preparing for a military confrontation.