The Arab world at this time was far from unified. By 1960, there were at least three major players bidding for leadership of the Arab world: Gamal Abdul Nasser of Egypt, King Hussein of Jordan and Abd al-Karim Qasim of Iraq. Each of them tried to out-do the others in claiming to be the leader of the hapless Palestinian Arabs, now numbering over a million.
Qasim opposed Nasser's plan for a pan-Arab state with himself as leader, pushing instead for a looser confederation of Arab states. He proposed a Palestinian Arab republic in the West Bank and Gaza, directly challenging Nasser's non-stop rhetoric claiming to help the Palestinians as well as Jordan's annexation of the West Bank.
Nasser, who was now head of the United Arab Republic of Egypt and Syria, responded by setting up a "Voice of Palestine" radio station and a newspaper called "Akhbar Filastin." In addition, Nasser set up a pseudo "Palestinian army" in Gaza and formed a quasi-government in Gaza that recalled the ill-fated Gaza government of 1949. Qasim responded by setting up his own "Palestinian Liberation regiment" in Iraq.
King Hussein, for his part, offered citizenship to any Palestinian Arab, not just the ones in Jordan, as he wanted to equate Jordan and Palestine and was against all attempts to establish an independent Palestinian Arab state.
Meanwhile, the clashes within the Arab world were not only confined to the Palestinian Arab problem. Coups and assassinations happened often - Jordan and Iraq were allied until the 1958 coup and assassination of King Faisal that brought Qasim to power, and Qasim was overthrown and killed himself in 1963 from a Baathist coup (in which 5000 were killed over two days.) There were many assassination attempts against King Hussein. Egypt became embroiled in a civil war in Yemen in 1962.
It is no wonder that these leaders tried to use the Palestinian issue to their advantage. Claiming to support Palestinian Arabs against Israel was an easy way to score political points, as the one thing that all Arabs could agree on was the need to destroy the Zionist state.
The Palestinian Arabs themselves were fragmenting into four major groups:
The Gazans were in many ways in the worst shape of all Palestinian Arabs. Completely dependent on UNRWA handouts and completely immersed in Egyptian Nasserite propaganda, they tended to support Nasser wholeheartedly even as he would use them purely for political points.
The fatalists were the ones who stayed in refugee camps, even more than a decade past their leaving Palestine and with little intention of leaving. They were happy to be living on the UNRWA dole, getting free education, medical care and food. They tended to support Nasser as well, and his vision of a pan-Arab nation in which they would become equal citizens again with their Arab brethren took strong hold of their imagination.
The pragmatists were the ones who left the camps and settled their families in Jordan, taking jobs and living in honor. They tended to be more supportive of the King and they didn't agitate nearly as much for a return to Palestine.
Finally, there were the ambitious Palestinian Arabs. This group tended to move further away from old Palestine and make their own way in life. In many ways, these were the spiritual and sometimes literal descendants of the hundreds of thousands who moved to Palestine in the first half of the century for purely economic reasons. Most of them moved to the Gulf states that were beginning to reap the benefits of the oil boom, although a significant number moved to Central and South America.
By the tens of thousands they moved to Saudi Arabia, Iraq and Dubai, taking jobs. The Kuwaiti economy and infrastructure was built to a large degree by Palestinian Arabs. They tended to be more educated, more highly-skilled and harder-working than their other Arab counterparts. Even so, they were not allowed become citizens of these nations that they were helping so much.
Starting in the late 1950s, some of these former residents of Palestine and their supporters started forming small groups dedicated to defeating Israel by force. Fatah was founded by Khaled Yashruti (born in Acre) and Yasir Arafat (born in Cairo) in this time period, and as early as 1959 it was publishing manifestos relying heavily on Arab concepts of honor and shame as their motivation:
The members of Fatah were mostly living in the Gulf states, as well as Algeria, and were not living in the camps that they so eloquently describe. They and the other nascent Palestinian Arab leaders were just as willing to use the Palestinian Arab masses as pawns for their own purposes as the Arab national leaders were.
In addition, in 1960, something called the "Palestine Liberation Army" that was based in the UNRWA camps engaged in terror acts against Israel, although it is unclear whether it was a home-grown Palestinian Arab group or one that was sponsored by an Arab country. (This is different than the Palestinian Liberation Army, created a few years later as a military wing of the PLO.)
Although Fatah styled itself early on as a "liberation movement" it did not start off with any aspirations to create a new independent Palestine, rather, its initial goal was simply the destruction of Israel for pan-Arab purposes. It initially intended to be completely independent of Arab governments that it mistrusted in the wake of 1948 and the refugees, however by 1964 it was effectively taken over by Syria in exchange for military training and weapons.
Meanwhile, other terror attacks against Israel continued. Most of these were also state-sponsored, usually from Egypt or Syria although often from Jordan as well. At this point the fedayeen trained by the Arab nations were much more deadly and brutal than Fatah - even as early as 1954 Jordanian terrorists shot each passenger in an Israeli bus point-blank, killing eleven of them. No matter what the methods or effectiveness, the goals were always the same: the eradication of Israel (and not necessarily the establishment of an Arab state in its place.)
The Palestine Liberation Organization was launched in 1964. Ostensibly, it was formed as a result of a meeting of the "Palestinian National Council" that held its first meeting only a few days beforehand, but in fact it was created by the Arab League in its Cairo meeting in June of that year. The PNC itself is a more subtle example of Arabs using Palestinian Arabs as pawns in their plans - the vast majority of delegates to the PNC are from the Palestinian "disapora," not from those who are actually suffering in camps.
The first leader of the PLO was Ahmad Shukairy, who was born in Lebanon. He drafted the "Palestinian National Charter" in 1964 with an eye towards Nasser-style pan-Arabism, not an independent Palestinian Arab state. The original charter itself denies the legality of the UN partition plan and indeed any British or international declaration that gave any land at all to Jews anywhere in the world, and it denies as well any Jewish connection to Israel:
Article 5: The Palestinian personality is a permanent and genuine characteristic that does not disappear. It is transferred from fathers to sons.
Article 6: The Palestinians are those Arab citizens who were living normally in Palestine up to 1947, whether they remained or were expelled. Every child who was born to a Palestinian Arab father after this date, whether in Palestine or outside, is a Palestinian.
Article 11: The Palestinian people firmly believe in Arab unity, and in order to play its role in realizing this goal, it must, at this stage of its struggle, preserve its Palestinian personality and all its constituents. It must strengthen the consciousness of its existence and stance and stand against any attempt or plan that may weaken or disintegrate its personality.
Article 12: Arab unity and the liberation of Palestine are two complementary goals; each prepares for the attainment of the other. Arab unity leads to the liberation of Palestine, and the liberation of Palestine leads to Arab unity. Working for both must go side by side.
Articles 5 and 6 attempt to arrive at a definition of "Palestinian" that is independent of self-identification. A people who truly have strong cultural and communal ties would not require such a definition, and its effect is to keep the Palestinian issue alive. By defining a Palestinian personality separate from the more general definition of Arab, the effect of the charter is to do everything possible to avoid Palestinian re-integration into Arab society.
Those two articles are effectively contradictory with Articles 11 and 12, where Arab unity is stressed right after Palestinian separateness.
Most telling is the section in Article 11 where the charter comes close to admitting that preserving what can only be described as precarious Palestinian "personality" is only important "at this stage of its struggle." This strongly implies that once Palestine is "liberated" from the grips of the Jews, the national aspirations of the Palestinian Arabs would disappear and become subsumed into a more general unified Arab state.
Putting these paragraphs together, the original purpose of the PLO and the PNC becomes clear: to keep the Palestinian Arabs from ever assimilating into the Arab world as long as they can remain useful to pressure Israel internationally. Once this usefulness disappears, so would the Palestinian people. It was not an organization that was interested in the welfare of the hundreds of thousands of Palestinians in need, rather it was fixated on how to use them to destroy Israel.
Another interesting paragraph in the charter seems at odds with the original Fatah viewpoint regarding the dignity of Palestinian Arabs. While Fatah decried Western aid to Palestinian refugees as an affront to Arab honor and dignity, the PLO regarded it as a right:
This also shows that the PLO was not at all interested in Palestinian Arabs themselves and that its platform was more aligned with the Arab League than with the people it was claiming to be defending. The Arab League showed no more interest in alleviating Palestinian Arab suffering in 1964 than it did when it announced its first disastrous boycott of Jewish goods and services in 1945. And although Ahmad Shukairy's father was Palestinian, his career up to this point was being a diplomat for both Syria and Saudi Arabia as well as working for the Arab League itself.
Yet another article shows even more clearly how national aspirations were entirely absent from a "National Charter:"
The second Arab summit, held in Alexandria in September 1964, endorsed the PLO as the representative of the Palestinian people and quickly acted to establish a Palestinian Liberation Army as a military wing to the PLO.
Fatah, not yet a part of the PLO, established its own military wing called al-Asifa in 1965. Fatah's first attack against Israel occurred that year, as they tried to bomb Israel's National Water Carrier. This was followed by a number of other (mostly unsuccessful) attempts to attack Israel's infrastructure.