Salam Fayyad has formally resigned his post as prime minister of the Palestinian Authority. Note the word formally. In the half-presidential, half-parliamentary, mostly improvised political system of the Palestinian non-state, Fayyad will apparently stay on until President Mahmoud Abbas appoints a replacement, or until elections are held, or indeterminately as his resignation fades from memory.
It would be wrong to say that Fayyad has become a caretaker prime minister, because he has always been a caretaker. Abbas appointed Fayyad to head an emergency government in 2007, when the attempt at power-sharing between Abbas's Fatah movement and the Islamicist Hamas movement ended in a brief civil war. The Palestinian parliament, where Hamas has a majority, never approved the appointment. Both the president and parliament have outlived their legal terms of office. Yet Fatah continues to rule the West Bank, just as Hamas keeps ruling Gaza.
A week-and-a-half before Fayyad officially quit, Norwegian Foreign Minister Espen Barth Eide visited Jerusalem and Ramallah. Norway is not a country that stirs up much fuss. The travels and remarks of its foreign minister do not get heavy press coverage. Norway does, however, head the Ad Hoc Liaison Committee, which coordinates international economic aid to the Palestinian Authority. According to the last paragraph of a report in Ha'aretz (Hebrew), Eide told Israeli Prime Minister Benjamin Netanyahu that if there's no progress on Israeli-Palestinian peace, donor countries may stop writing checks. "We will not pay the bill forever. The money is meant to build the institutions of a Palestinian state. But if there is not going to be such a state, there is no reason to provide the funds," Eide reportedly told Netanyahu.
Eide presumably said the same thing to his Palestinian hosts in Ramallah. But his threat was aimed mainly at Israel. His logic was impeccable, and his threat was close to impossible to implement. Many reasons have been suggested for Fayyad's decision to quit; I haven't seen Eide's warning listed among them. Yet his dilemma is very similar to that of the donor nations: He intended to build a Palestinian state, and he has found himself maintaining the occupation.
The Liaison Committee was established in autumn 1993, just after Israel and the PLO signed the Oslo Accord. The accord was written as an interim deal. The Palestinian Authority would administer Gaza and parts of the West Bank. The Authority was autonomous but not sovereign. It ruled land officially under Israeli occupation and not recognized by anyone as belonging to any country. Lawyers and diplomats called the arrangement sui generis, which in this case translates as both unique and bizarre. After five years, Israel and the PLO were supposed to reach a final peace agreement, and a new entity, presumably an independent state, would inherit whatever the Palestinian Authority had built. Foreign governments and international institutions pledged funds to nourish the embryonic state. The United States, the European Union, the United Nations and the IMF, Japan and Saudi Arabia all sit on the Liaison Committee. More countries wrote checks. The five years of the Oslo Accord came and went, and the Palestinian Authority remained as a half-built monument to the optimism of '93.
The PA became Donation Nation. When Yasser Arafat headed the Authority, it was—let's say difficult—to trace where donor funds ended up. Arafat died. In 2006, in large part because of Fatah's reputation for corruption, Fatah lost the legislative elections to Hamas. The donor countries saw Fayyad's appointment in 2007 as a new start. For one thing, power-sharing between Fatah and Hamas was over. For another, Fayyad is an American-educated economist and respected former IMF official, a technocrat who promised to end corruption and build working institutions.
As Palestinian journalist Daoud Kuttab recently wrote, Fayyad fulfilled much of that promise. He made the PA's finances public. Perks shrank and slush funds dried up, much to the discontent of Fatah apparatchiks. Two years ago, the World Bank reported to the Liaison Committee that if the Palestinian Authority maintained its progress, it was "well-positioned for the establishment of a state at any point in the near future." Under Fayyad and Abbas, the PA's security services made it safe to walk the streets of West Bank cities and worked closely with Israel to prevent terror attacks in Israeli cities.
But Fayyad hasn't come close to realizing his goals of economic and political independence. The Palestinian economy still rests on foreign aid; creating a productive sector under occupation has proved impossible. In 2009, Fayyad announced that his government would turn the PA into a functioning state in two years, presenting Israel with "a fact it cannot ignore." This was a technocrat's fantasy: good management would remove the need for a peace agreement. The last serious peace negotiation between the PA and Israel broke down in 2008 with the resignation of Netanyahu's predecessor, Ehud Olmert. Netanyahu has proved quite capable of ignoring the World Bank report on the PA's ability to function as a state.
Instead, Netanyahu and the Israeli right are quite comfortable with what they call the status quo: The PA manages the occupation as Israel's subcontractor. It provides health, education, and police services in the parts of the West Bank under its control, and donors pay the bills.
If the donor countries collectively stopped paying, Abbas might be forced to shut down the PA and to hand the economic and security burden of administering the occupation back to Israel. That's the last thing Netanyahu or any other Israeli leader would want.
But an aid cutoff would hurt Palestinians first. The Palestinian Authority is the source of livelihood for a million-and-a-half people, estimates Dr. Menachem Klein, a leading Israeli expert on Palestinian politics. That's over a third the population of the West Bank and Gaza. Besides, Klein argues, the current situation is more comfortable for European governments than a new Palestinian uprising that could spark pro-Palestinian demonstrations in their own streets. So Eide's threat made sense, yet Western donors are likely to continue transferring funds. Arab donors, who have never been quick to meet their pledges, are another matter.
The immediate causes of Fayyad's resignation appear to be a shortfall in foreign funding that has exacerbated the tensions between the prime minister and Fatah. The deeper reason is that without progress toward independence, Fayyad's position is untenable. Yet walking out of his office and shutting the door without a reasonable arrangement to replace him would be irresponsible. Hence the uncertainty about whether and when he'll actually leave. His desire to quit, though, should serve as an omen to Israel, and to Europe and the United States: The status quo can't last. Israeli-Palestinian relations are more like a bicycle than a building: They will be stable only if they keep moving forward.