The effort to build a modern Palestinian state that will live in peace with Israel suffered a great setback last week when pressure from both Fatah and Hamas forced the resignation of the Palestinian Authority prime Minister, Salam Fayyad.

Fayyad, born in 1952 in the northern West Bank, is an economist with a Ph.D. from the University of Texas. He had worked for the IMF as its representative to the PA, and then for Arab Bank, before becoming finance minister in June 2002. The timing was not coincidental: Yasser Arafat was under severe pressure from the United States and other key donors to end the amazing corruption and the support for terrorism that marked his reign. In an April 2002 speech, President George W. Bush had attacked Arafat as a terrorist; two months later he said flatly that “Peace requires a new and different Palestinian leadership.” Bush insisted that “a Palestinian state will require a vibrant economy, where honest enterprise is encouraged by honest government.” Feeling the pressure, Arafat reacted by asking Fayyad to take on the finance ministry, where he began the immense task of attacking corrupt officials and practices in Arafat’s squalid satrapy. Needless to say, this earned him no friends among corrupt Fatah Party and PLO officials who had long gorged on foreign aid funds. Fayyad’s whole style was Western, dedicated to efficiency, productivity, and clean government. He put the entire PA budget, hitherto hidden behind clouds of rhetoric and dissimulation, on the Internet.

Fayyad resigned to run for office in the January 2006 parliamentary elections, where his independent party—he has never been a member of Fatah— won only two seats and Hamas won a majority. In June 2007, after the Hamas coup in Gaza, President Abbas dismissed the Hamas-led government and appointed Fayyad prime minister, where he has now served six years—under assault from old-timers in Fatah and from Hamas militants the entire time.

From Fatah cronies of Arafat in the old days and of Abbas more recently, there is an understandable and venal desire to return to the pre-Fayyad period when billions in foreign assistance dollars provided good livings to corrupt officials. And from Fatah and Hamas both, there is opposition to Fayyad’s positive approach to state building. Palestinian political culture, from the days of the Grand Mufti Haj Amin al-Husseini before the Second World War to those of Arafat, Fatah, and Hamas more recently, has been oppositional: at the center is “resistance” to Israel, especially armed resistance. Fayyad’s greatest weakness as a political figure in the Palestinian territories is that he has never shot at Israelis or spent time in an Israeli prison. He is, instead, a builder—of institutions and ultimately he hopes of a modern state. In 2009, speaking about the Oslo accords sixteen years after their signing—and their failure to produce much, he said this: “After 16 years why not change the discourse? We have decided to be proactive, to expedite the end of the occupation by working very hard to build positive facts on the ground, consistent with having our state emerge as a fact that cannot be ignored. This is our agenda, and we want to pursue it doggedly. It is empowering to even think that way.” No talk about Zionist conspiracies or the armed struggle, just empowerment and “positive facts on the ground.”

For this reason Fayyad opposed Abbas’s move in the United Nations to get “Palestine” admitted as a state. As he put it in 2010, Palestinian statehood “is not something that is going to happen to the Israelis, nor something that is going to happen to the Palestinians. It is something that will grow on both sides as a reality... creating a belief that this was inevitable through the process, a convergence of two paths…from the bottom up and the top down.” On another occasion I heard him remind his listeners that Israel was not created in 1948 but simply recognized that year; it was created over decades by Zionist efforts, and that’s how a Palestinian state has to be created. This was the essence of what became known as Fayyadism, a bottom-up and entirely non-violent approach to state-building that assumed Palestinians must build a state, institution by institution, if they want to have one. The progress has been considerable, not only in creating embryonic state institutions like finance, health, interior, education, and other ministries, but in creating a national police force. Largely trained by the United States at a center in Jordan, these police officers reported to the interior minister and ultimately to Fayyad, who told them they were there neither to attack Israel nor to protect Fatah, but to keep the peace and help build a state. Cooperation with Israel’s police and military forces was extensive.

But Fayyad always understood that it would be an uphill fight to get this message adopted as the Palestinian agenda. He needs no lectures about Palestinian political culture. It is of course disappointing that his message has proved uninspiring to too many Palestinians, in Hamas and also in Fatah. State-building after all sounds like hard work, without any drama or immediate gratification—and without the emotional rewards that come to very many Palestinians from verbal and physical attacks on the Israelis. But Fayyad went in knowing all that. If he is disappointed today, it is with the levels of support the message and the approach got from Arab governments, Israel, and the United States.

From the Arabs, Fayyad always got remarkably little. American and European foreign aid levels were very high, but Arab support was always a day late and a few hundred million dollars short. Fayyad’s own integrity and his insistence on rooting out corruption largely killed the old excuse of the rich Arab oil exporting nations, that they would not give because their money would be stolen. But very few of them ever met their pledges, or met them on time, or increased them when the price of oil and therefore their own budget surpluses jumped. The cause of Palestine was great for speeches but less alluring when it came to writing checks. So month after month Fayyad was weakened by his inability to meet the PA payroll on which so many (far too many, in fact) Palestinians are dependent. For this reason he should have resigned a year or two ago, before the financial problems cut into his own popularity and his reputation as a man who could deliver.

Israeli governments also gave him less cooperation than he deserved. Had life been improving very tangibly for Palestinians in the West Bank, perhaps Fayyad and Fayyadism would have gotten more credit. This would have required that the Israelis keep the flow of PA tax revenues (much of which they collect and theoretically pass on) moving regularly, without the frequent delays they have imposed. It should have led to quicker action to remove checkpoints and barriers in the West Bank that interfere with mobility and commerce while doing little to protect Israeli security (something the Netanyahu government has in fact been doing, but could have begun earlier and gone further). It should have led to greater steps to increase Palestinian autonomy in the West Bank, and to greater efforts to reduce the number and size of Israeli raids into Palestinian cities.

Fayyad is probably most disappointed in the United States, the foreign power that has spent the greatest time, money, and energy to promote the two-state solution. During his years as finance and then prime minister, we have concentrated far more on the negotiating track than on actually building Palestinian institutions. After one American visit to Ramallah leading up to the Annapolis conference, Fayyad flatly told me “you guys are not helping me. This is all about Abbas and the PLO and the talks, not what I am trying to build here.” He was right: our priority has always been a comprehensive agreement signed on the White House lawn, and while we have always lauded Fayyad and his efforts they have never been central to American policy. The concessions we have intermittently sought from Israel have too often been steps like the freeing of prisoners, something that strengthens Fatah leaders but does nothing to advance state-building.

When Fayyad is gone, at least two effects are probable. First, donors will be even more reluctant to give. Now it really will be true that we cannot be sure where the money goes, a complaint that will be heard in European parliaments, the U.S. Congress, and Gulf Arab palaces. Corruption among top Fatah officials has never gone away and without Fayyad to fight it, it will grow. Some of the people tipped as his possible successors are known to the United States government to be corrupt and perhaps we can block them, but a new, little-known prime minister will have little clout in keeping big hands out of the many official tills.

Second, those Palestinian police forces may revert to what such groups were under Arafat: Fatah gangs. In the last year they had already begun to slip from Fayyad’s control and report more to Abbas, and this dangerous trend will now develop faster. This threatens the human rights situation in the West Bank, will make law and order there more tenuous, will likely reduce Israeli-Palestinian security cooperation, and runs some risk that the police will actually end up in confrontations with Israeli forces.

If the murderous war in Syria, the Muslim Brotherhood government in Egypt, and the instability in Jordan were not enough to make Secretary of State Kerry’s “Negotiations Now!” peace shuttle seem untimely, Fayyad’s departure adds another depressing note. Secretary Kerry’s apparent purpose is to get the parties to the table. But then what? What magic will occur when they get there? If the American goal is the two-state solution—to see a decent, democratic, peaceful Palestinian state come into existence next to Israel—our ability to reach that goal has just suffered a great blow. For Fayyad is right, and has been right all along: a Palestinian state will not be created at the U.N., or on the White House lawn, or even at the negotiating table; it must be created on the ground, in the West Bank, piece by piece. And that task just became a great deal harder.

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