The Palestinian Authority submitted a draft resolution to the U.N.

General Assembly that would recognize the Palestinians as a nonmember state of the U.N., a move that could have far-reaching implications for the 65-year-old Israeli-Palestinian conflict.

 A vote is set for Thursday in the 193-seat U.N. General Assembly, the 65th anniversary of the Assembly's resolution that created Israel by partitioning British-mandate Palestine into Israeli and Palestinian states. The Palestinians rejected the resolution and war with Israel ensued, leaving the Palestinians without a state. The Palestinians then accepted the partition resolution in 1988 when it formally declared independence.

 Since 132 nations have already recognized the territory as a sovereign state, with some having exchanged ambassadors, a simple majority vote of 97 countries is all but certain.

 Israel and the U.S. have put intense pressure on Mahmoud Abbas, president of the Fatah Party-led Palestinian Authority, to put off the vote, arguing it is a "unilateral" move in the multilateral assembly, and that statehood can only come through direct Israeli-Palestinian talks. The U.S. Congress has threatened to cut off funding to the authority and to any U.N. agency Palestinians might join as a result of their U.N. upgrade. Israel has threatened to withhold tax revenue, which it collects for the Palestinians.

 Despite these threats, Mr. Abbas is heading to New York to be present for the Thursday vote, which may garner as many as 130 votes in favor, diplomats said.

 As the conflict raged in Gaza last week, the Palestinians' bid to become a nonmember observer state—which had been a focal point in Palestinian-Israeli relations—had essentially become a sideshow.

 But now that the dust has settled from the latest round of violence, diplomats say a groundswell of support for the Palestinian Authority and its U.N. upgrade has been gaining ground because the war politically strengthened Hamas at the expense of the more pro-Western authority.

 More countries are lining up to support the U.N. bid to bolster the authority at Hamas' expense, as the authority has renounced violence, recognized Israel's right to exist and is considered a more reliable negotiating partner than Hamas, diplomats said.

 "This war has bolstered the prestige of Hamas because of its resilience against Israel, and the whole idea now is saving Abbas,"

said a European diplomat. "Fatah is in a politically difficult situation and the idea is to try to restore or at least heal their political wounds, and perhaps provide them with some political prestige by attaining a new status at the U.N."

 Hamas, which had consistently opposed the U.N. bid, reversed course on Sunday, declaring that it now supports it.

 "[Hamas leader] Khaled Meshaal…held a telephone conversation with Palestinian president [Mahmoud] Abbas in which he affirmed that Hamas welcomes the step of going to the United Nations for state observer status," a Hamas statement said.

 The U.S. doesn't have a veto to block the bid in the Assembly as it does in the Security Council, where last year its veto threat helped kill the authority's move for full U.N. membership.

 "We've obviously been very clear that we do not think that this step is going to bring the Palestinian people any closer to a state, that we think it is a mistake, that we oppose it, that we will oppose it,"

said U.S. State Department spokeswoman Victoria Nuland at a press briefing on Monday.

 While the Palestinians had been counting on at least 115 votes before the war, they feared some European nations that have recognized the territory would abstain, diplomats said. The prospect of a more legitimate 130 votes is now within reach, they added.

 As an upgraded observer state, a Palestinian state could join treaties and specialized U.N. agencies, such as the International Civil Aviation Organization, the Law of the Sea Treaty, the Nuclear Non-Proliferation Treaty and the International Criminal Court, officials said. That would give a Palestinian state legal rights over its territorial waters and air space, and would allow it to bring war-crimes charges against Israel.

 "So many doors would open up to us," said Riyad Mansour, the Palestinian U.N. observer.

 But there are serious risks for the Palestinians and for the U.N.

system if the vote is held. Israel has threatened to withhold $100 million a month in tax revenue, which it collects for Ramallah, if they go ahead with it.

 The U.S. Congress has threatened to cut off $500 million in security and economic aid to the Palestinians if it becomes an observer state.

Congress cut off funding last year to Unesco, the U.N.'s cultural agency, when it accepted a Palestinian state as a member. Congress has already decided to stop funding any other U.N. organization that the territory joins as a result of its upgraded status.

 Despite these threats, the Palestinians are going for a Thursday vote.

 "If anything Abbas is even more emboldened and certain to push ahead on Thursday since the Gaza crisis has helped Hamas's stock rise at the cost of Fatah's international clout. For example it gained more respect and attention from Egypt, Turkey and Qatar," said a U.N.

Security Council diplomat.

 The 316-word Palestinian draft calls for a resumption of talks with Israel, without mentioning a long-standing authority condition of a freeze on the building of settlements in the West Bank first. It also makes no mention of joining U.N. agencies and treaties.

 Before it was submitted on Monday, a European diplomat said that to get more EU votes the draft should "make it explicit it isn't an application to join funds and programs," which could trigger the defunding.

 By leaving out direct mention of joining the International Criminal Court or the other agencies, the Palestinians could keep those options in reserve as "bargaining chips" with the Israelis down the road, rather than "shoot the whole quiver" on Thursday, the diplomat said.