There's no such place as Palestine.

Legally and diplomatically, it doesn't exist. In the eyes of the world, if not the Palestinian people, it's a would-be country, a state of mind, a nation in waiting.Now, Yasser Arafat says that wait is nearly over.

In a speech to the U.N. General Assembly on Monday, the Palestinian leader is poised to make his boldest bid yet to turn statehood dreams to reality a scant seven months from now.

For many Palestinians - furious about stalled peace negotiations with Israel and desperate over their ever-worsening economic plight - even a perilous step like this is better than leaving matters as they stand.

"It's time, it's time," said Abed Absi, 33, who runs a hole-in-the-wall garment factory in one of Gaza City's sprawling refugee camps. "Look around - even if we lose everything, what is it that we really lose?"

Arafat has said for months that barring some negotiating breakthrough, the Palestinians were likely to proclaim statehood as soon as the interim Oslo peace accords expire - on May 4, 1999, according to the Palestinian interpretation.

Even if what he says on Monday doesn't differ greatly from previous Palestinian statements, the setting dramatically raises the stakes.

Until now, such talk largely has been viewed here as a Palestinian bargaining tactic, meant to prod Israel into moving ahead with long-delayed troop pullbacks.

But a direct appeal by Arafat for international support for an independent Palestine - delivered from center stage at the United Nations - carries far more symbolic weight.

And it comes only four days after Israeli Prime Minister Benjamin Netanyahu used his own appearance before the world body to deliver a blunt warning to the Palestinians: Don't do it.

"Such actions will inevitably prompt unilateral responses on our part," Netanyahu said Thursday.

Israel hasn't said publicly what its reaction would be, but possible steps include annexation of West Bank and Gaza Strip land still under its control, plus an economic boycott of the fledgling state.

There is also considerable risk of violent confrontation. The military establishments of both sides - in veiled but unmistakable language - have acknowledged they are preparing for the possibility of all-out warfare.

The Palestinians know they are hopelessly outgunned, but they take every opportunity to remind Israel that an impassioned popular uprising can stand up to overwhelming military superiority. The intefadeh, they say, proved that.

"We will fight to defend our state and existence by all means available," Palestinian intelligence chief Amin el-Hindi said last week.

Despite the dangers, the looming showdown already could be helping to break the long deadlock in Israeli-Palestinian negotiations.

It may be no coincidence that the only real movement in months comes as the Palestinians aggressively press their statehood cause: Netanyahu on Friday formally confirmed for the first time he was ready to accept a U.S. proposal for Israel to withdraw from an additional 13 percent of the West Bank.

Both sides have reasons for wanting to abandon the Oslo accords, and the statehood quarrel could provide a pretext for that.