Australia/Israel & Jewish Affairs Council

After Salam Fayyad

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Update from AIJAC

April 17, 2013
Number 04/13 #04

As readers are probably aware, Palestinian Authority PM Salam Fayyad  - widely seen internationally as a competent, efficient and moderate state-builder - submitted his resignation on Saturday and had it accepted by President Mahmoud Abbas. This Update is devoted to analysis of how Fayyad's resignation came about, and the implications of this change for the future of the Palestinian Authority (PA) and Israeli-Palestinian relations.

First up is Washington Institute scholar David Makovsky. He comprehensively outlines Fayyad's history and achievements as PM, and his targetting by elements of the ruling Fatah movement which ultimately led to his departure. Most importantly, Makovsky surveys a number of possible implications, including for aid to the Palestinians, on the Hamas-Fatah split, on PA stability and on prospects for renewing Israeli-Palestinian negotiations. For this wide-ranging backgrounder in full, CLICK HERE. More on the implications of the change, including some speculation about successors to Fayyad, from the Economist.

Next Up Barak Ravid of Haaretz makes the point that Fayyad's success to some degree contributed to his departure. He notes that Fayyad has, because of his international support and domestic achievements, come to be seen by some Palestinian powerbrokers  as a dangerous rival to Fatah and President Abbas - with the crisis coming to a head over the PA's UN bid last year and a dispute about a finance minister. Ravid argues that Fayyad's departure amounts to a significant setback to the Obama Administration's hopes to rekindle peace talks. For all of Ravid's discussion, CLICK HERE.

Finally, American writer Jonathan Tobin attempts to draw some wider lessons on the state of Palestinian society and of the peace process from the Fayyad resignation. He sees it as a pivotal moment in the peace process - the collapse of hopes, represented by Fayyad,  that the Palestinian nationalist movement could be re-focussed on state-building, rather than conflict with Israel. Tobin also argues that the end of Fayyadism underlines fundamental flaws in the Oslo peace process in terms of misunderstanding how Palestinian nationalism relates to Israel and achieving statehood. For his complete argument, CLICK HERE. Also underlining what Fayyad's forced departure tells us about problems in Palestinian society is Canadian academic Gil Troy, while blogger Seth Mandel argues that Fayyad's achievements as a nation-builder are over-rated and call into question whether aid to the Palestinians is money well spent.

Readers may also be interested in:


The Fayyad Resignation: Scapegoating a State-Builder

David Makovsky

PolicyWatch 2068, April 16, 2013

The political wrangling that effectively forced Fayad to step down raises serious questions about the PA's economy, security cooperation, and political transparency, as well as U.S. efforts to revive the peace process.

On Saturday, Palestinian Authority prime minister Salam Fayad tendered his resignation amid ongoing tension with President Mahmoud Abbas and the ruling Fatah faction. For now, he will remain in office as caretaker premier, but his departure -- whenever it comes -- could be a blow to the Palestinians, particularly in terms of how much international aid they receive once he is gone.

FAYAD THE SAVIOR

A U.S.-trained economist who worked at the International Monetary Fund for fourteen years, Fayad became the PA's finance minister in 2002 upon demand by donor countries who were concerned that their contributions were being diverted for corruption. Once in office, he made the PA change its approach from that seen at the end of the Arafat era, whereby security personnel were paid via paper bags full of cash. Fayad insisted that every such employee have a bank account and be paid on time.

After Hamas took over Gaza in 2007, Fayad became prime minister. His tenure has since been defined by institution-building, including in the areas of finance and security -- an approach that became known as "Fayadism." Security cooperation with Israel became the norm. As violence decreased and order returned to the street, Israel lifted many of its West Bank checkpoints, while the PA built 1,700 community development programs, 120 schools, 50 health clinics, and 3 hospitals. More than 1,000 miles of roads were paved, and 850 miles of water pipes were installed. In 2011, the World Bank issued a report noting that the Palestinians had built institutions and infrastructure befitting a state.

In particular, Fayad's embrace of economic transparency -- which included U.S.-led audits -- was instrumental in attracting increased international aid. Despite a deep worldwide recession, the IMF reported 9 percent growth for the West Bank between 2008 and 2010. As late as the second half of 2011, public support for Fayad's government was at 53 percent, 19 points ahead of the Hamas government in Gaza, according to Khalil Shikaki's Palestinian Center for Policy and Survey Research. Yet elements within the mainstream Fatah Party regarded Fayad as Abbas's rival, viewing him as a political independent and outsider who might eventually supersede their control over the PA post-Abbas.

FAYAD THE SCAPEGOAT

Despite Fayad's initial success, a recent economic downturn in the West Bank has taken its toll. Amin Maqboul, secretary-general of the Fatah Revolutionary Council, claimed that Fayad resigned because he "failed to manage the economic crises, put the Palestinian Authority in debts of $1.5 billion, and was not able to provide salaries on time." This criticism fit a longstanding pattern in which Fatah political elites have used Fayad as a scapegoat for Palestinian economic troubles, in part out of resentment at his efforts to constrain patronage and corruption.

Yet blaming Fayad for the latest downturn is especially audacious. After all, he repeatedly warned that Abbas's statehood bids at the UN Security Council (September 2011) and General Assembly (November 2012) would spur Washington to cut off aid, and Israel to halt the transfer of Palestinian tax revenues. Last fall, he broke his hand in a meeting with Fatah members as he banged it on the table, vehemently arguing that it was irresponsible to go to the UN unless there were sufficient reserves to cover an aid slowdown. According to the World Bank, foreign aid constitutes 14 percent of Palestinian gross domestic product, and 22 percent of jobs are in the public sector.

Predictably, some funding was halted following the statehood campaign, and full salaries could not be paid to the 150,000 PA workers for months. Yet Abbas did not take responsibility for that development. Instead, Bassam Zakarneh, head of the government employees union, called for strikes and led protests outside Fayad's office. A member of the Fatah Revolutionary Council, Zakarneh is known to be close to Abbas. While Fayad offered his resignation as far back as late February, he continued to seek common ground to end the impasse. When Finance Minister Nabil Kasis quit in March over the inability to pay salaries, Fayad accepted his resignation in accordance with the Palestinian Basic Law. Abbas refused to accept it, however. Fayad then indicated his willingness to have Kasis return, provided the president follow the law and formally reappoint him. Abbas refused.

Around the time of President Obama's visit last month, Washington released $500 million in aid to the Palestinians, and Israel resumed tax transfers, allowing PA salaries to be paid in full. Yet the political wrangling persisted. Although Abbas told Secretary of State Kerry in recent days that he wanted Fayad to remain in power, top presidential aide Azzam al-Ahmed told an Arabic satellite television outlet on Saturday that Washington was exerting pressure on Abbas and seeking to "humiliate" the PA. As Palestinian official Hanan Ashrawi put it, "There was a very public campaign trying to discredit [Fayad], he became the scapegoat for everybody, the attacks became personal and infringed on his character."

IMPLICATIONS OF FAYAD'S DEPARTURE

A key question is whether Fayad's departure will reduce international confidence in Palestinian economic transparency and renew fears of misused funds. If the new prime minister is an Abbas crony, those fears will likely grow. Despite ongoing speculation, no candidate has yet been named. If Fayad's successor does not inspire sufficient trust among U.S. and European donors, it will be interesting to see whether Qatar steps forward to fill the funding vacuum. So far, most of Doha's Palestinian aid has gone to Hamas.

On the reconciliation front, Fayad's departure is unlikely to bring Fatah and Hamas together. Although Hamas long distrusted his focus on security cooperation with Israel, the group has already stated that his resignation will have no impact. For their part, senior PA officials have said that reconciliation is impossible so long as Hamas aims to take over the Palestine Liberation Organization.

More broadly, Fayad's departure could affect the PA's ability to avoid the upheaval that has swept the Arab world since 2011. Returning to pre-Fayad economics and instituting a more authoritarian political system would be a recipe for disaster in the West Bank. Accordingly, Washington and other donors should consider demanding that the Palestinians open up their political system and enable the formation of robust parties. This could reduce manipulation and allow independents such as Fayad -- who might remain a key player on the political scene even after he steps down -- to openly air their differences and compete on a level playing field.

The departure of a trusted U.S. ally might also affect Kerry's efforts to revive Israeli-Palestinian peace talks. Although Fayad was not involved in the negotiations, his focus on democratic governance and transparency provided a sense of reassurance about the future domestic trajectory of a Palestinian state. In addition, Kerry hopes to promote various economic projects in the West Bank, which may be more difficult to do without a credible partner like Fayad. He will also need to take extra care that security cooperation with Israel does not unravel in Fayad's absence.

Finally, the resignation is a reminder of the law of unintended consequences. The United States withheld money to protest Abbas's decision to go to the UN, yet the PA president was able to manipulate that measure and scapegoat Fayad instead.

David Makovsky is the Ziegler distinguished fellow and director of the Project on the Middle East Peace Process at The Washington Institute.

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Fayyad's resignation: The beginning of the end of the PA?

It was actually the PA prime minister's successes that eventually led to his downfall. His effective management and relative popularity meant he was a threat to too many people

By Barak Ravid

Haaretz,  Apr.14, 2013

The resignation of Palestinian Authority Prime Minister Salam Fayyad on Saturday is a dramatic development. Its ramifications won't just reverberate in the part of the West Bank under Palestinian control, but also affect Israel and the Obama administration's efforts to renew the peace process, as well as the European Union's policy towards the Palestinians.

For Israel's government and defense establishment, the U.S., and the EU, which both regularly provide economic aid to the Palestinian Authority, Fayyad was the go-to man. The former International Monetary Fund economist was educated in the U.S. and was a symbol of good governance and the war on corruption. His plan to build Palestinian state institutions from the bottom up received much international support.

But it was this success that itself bore within it the seeds of his demise. Fayyad, who served as prime minister since 2007, resigned after his relations with PA President Mahmoud Abbas deteriorated, reaching an unprecedented low. The crisis of confidence between the two leaders was sharp and irreparable. Abbas and the Fatah party's old guard that surround him saw Fayyad as a political rival who needed to be eliminated.

Fayyad's resignation is another sign of the PA's internal disintegration and the deep political crisis it is struggling with. In order to survive, Abbas imposed a semi-autocratic regime in the West Bank styled after that of former Egyptian President Hosni Mubarak. Journalists and bloggers are sent to prison, demonstrations and criticism are suppressed with an iron fist and the government doesn't function while the ruler travels the globe.

The PA president looked on with jealously as Fayyad gained popularity not only in Washington and Brussels but also in the West Bank. Senior Fatah party members saw Fayyad as an obstacle toward their political and economic ambitions. The Palestinian prime minister refused to transfer funds to them or to appoint them as ministers.

The financial crisis that struck the PA fell like ripe fruit into the hands of Abbas and the Fatah bigwigs. They decided to direct the public anger over the rising cost of living and high unemployment towards Fayyad and his government.

The conflict between Abbas and Fayyad grew following the latter's objection to Abbas' decision to unilaterally declare Palestinian independence at the United National General Assembly. Fayyad thought it was merely a symbolic step without real benefit and warned of the damage it would cause the PA as a result of Israeli sanctions. Fayyad was right. Israel responded by stopping the transfer of the PA tax revenues deepening the West Bank's economic crisis and almost bringing it to a state of insolvency.

Over the past year Fayyad came very close to resigning several times, but every time he reconsidered, principally due to American and European pressure. The straw that broke the camel's back for Fayyad was the resignation at the beginning of this March of his close confidant Nabil Kassis, the PA's finance minister.

Kassis, who was on the receiving end of the harsh public criticism due to the economic crisis, presented his resignation to Fayyad, who as prime minister accepted it. Abbas, who was on one of his many trips abroad fumed at his acceptance of Kassis's resignation and demanded that Fayyad return Kassis' resignation letter. Fayyad refused, claiming that Abbas was infringing on his authority as prime minister, the very same authority that Abbas himself demanded from then-PA President Yasser Arafat when he was appointed prime minister in 2003.

In recent days, by which time Fayyad's resignation had only become a matter of time, U.S. Secretary of State John Kerry and some of his European colleagues tried to prevent the falling out. Kerry attempted to mediate between Abbas and Fayyad, but his efforts never really stood a chance.

Fayyad's resignation will place a question mark on the prospect of continued international aid to the PA. Without Fayyad guarding the public coffers, it's not certain that the countries currently providing the PA with aid will continue to do so. Israel will also hesitate to promote economic measures in the West Bank with Fayyad away from the steering wheel. The economic crisis in the West Bank will deepen, which means that the road to the next bout of violence is a short one.

Fayyad's resignation is also a harsh blow to the Obama administration, and its plan to promote the peace process. A senior Israeli official pointed out that Fayyad didn't handle negotiations with Israel, so that at a first glance his resignation shouldn't affect the American-led peace efforts. Nevertheless, the official added, Fayyad's departure will frustrate the administration, which relied on him and saw in him a responsible figure.

On Saturday, senior political officials expressed much regret over Fayyad's resignation. However, it was a case of too little, too late. The Netanyahu government's relationship with Fayyad was one of ambivalence. On the one hand, it saw in Fayyad a trustworthy partner on all matters related to economic and security coordination. On the other hand, there were those who saw him as a threat because of the success of his plan to build the infrastructure for a future Palestinian state. Israel is not responsible for Fayyad's resignation; however, the policy of Netanyahu's government certainly didn't help Fayyad's survival on the job.

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Fayyad’s Exit Signals Oslo’s Bankruptcy

Jonathan S. Tobin 

Commentary "Contentions" -  04.14.2013

The resignation of Palestinian Authority Prime Minister Salam Fayyad is a pivotal moment in the history of the conflict between Israel and the Palestinians. Given that it is the product of an internal Palestinian political struggle rather than one in which Jews and Arabs are grappling for power, that may seem an exaggeration. But its significance should not be underestimated. The exit of the Palestinian technocrat lays bare the collapse of what the New York Times called “Fayyadism”—the hope that Palestinian nationalism would be refocused on development and coexistence rather than violence. Without the fig leaf of responsibility that Fayyad provided for the PA, the idea that it is anything but the same corrupt regime fatally compromised by connections with terror rings false.

The inability of Fayyad to either generate much public support among the people of the West Bank or to use his credentials as a respected international figure to outmaneuver Abbas is a tragedy for the Palestinian people. His failure dooms them to a choice between the venal and incompetent cadres of Fatah or the bloody Islamist tyranny of Hamas (which has always regarded the banishment of Fayyad from office as a precondition for any unity scheme with Abbas and the PA). That is unfortunate. The only question is whether those pushing Israel to further empower the now Fayyad-less PA will draw the only possible conclusion from these events and understand that the two-state solution that could conceivably solve the conflict must await a sea change in Palestinian politics that will allow another Fayyad to emerge and succeed.

There will be those who will inevitably blame Israel for Fayyad’s resignation since many in the world are incapable of interpreting any event that is construed as negative without seeing it as a manifestation of the malign influence of the Jewish state. But this is nonsense. Fayyad has always had the strong support of both the United States (under both the George W. Bush and Obama administrations) and of Israel, which despite its suspicions about the PA has seen him as an essential interlocutor and partner. His problem is that Abbas’s Fatah Party viewed him as an obstacle to both their drive for political hegemony in the West Bank as well as to the continuation of their crooked patronage schemes that diverted foreign aid money into the pockets of their leaders. As Jonathan Schanzer, who understands Palestinian politics as well as anybody writing about the subject in the West, wrote on the Foundation for Defense of Democracies blog this week as events unfolded:

  With the most powerful faction in the West Bank gunning for Fayyad, it is likely a question of when, not if, the Palestinian premier departs.  This would be a blow to Palestinian reform efforts, but also shine a spotlight on the leadership deficit in the West Bank.

It should be conceded that for those who see the question of Israeli-Palestinian peace solely from the frame of reference of the Jewish state’s problems in controlling large numbers of Arabs, the question of who runs a Palestinian government has always been considered irrelevant. Peace Now and other groups that venerated the Oslo Accords and the peace process were perfectly willing to hand over territory to a murderer and thief like Yasir Arafat and opposed all efforts to hold him accountable. So it should be anticipated that they, and others who push for Israeli withdrawals in order to weaken the Jewish state rather than to supposedly strengthen it by ending the “occupation,” will not care much whether the face of Palestinian nationalism is Fayyad, Abbas (currently serving the ninth year of the four-year term as president that he was elected to) or one of Hamas’s Islamists.

But the lack of a Fayyad matters because without him or someone like him, there is no pretense that what the peace processers seek to create in the West Bank is not a state living in peace with Israel (no matter where its borders are drawn) or its other Arab neighbors but a kleptocracy run by terrorists. If it is the former, then there is no doubt that a majority of the Israeli people would be willing to make painful compromises to achieve peace. If it is the latter, that is not only bad news for the Palestinian people who must suffer the depredations such tyrants will impose on them but it is also a guarantee that the terms of any peace deal signed with them will not be observed.

This conundrum goes to the heart of the original motivations behind the Oslo process that created the PA in 1993.

Shimon Peres may have conceived the Oslo process as a path to a “New Middle East” in which Israel and a Palestinian state led by Fayyads would create a Benelux-like enclave in the Middle East. The late Yitzhak Rabin went along with Peres’s Oslo gambit from a different point of view. He thought handing the territories over to Arafat would work because the old terrorist would be willing to settle for statehood in only part of the country and would then be free to quash Hamas and any other terrorists without the interference of a Supreme Court or gadfly groups like B’Tselem that inhibited Israeli counter-terror measures.

As it turns out, both of these men were wrong. Peres’s hopes about what the PA would become were delusional. But the hard-boiled Rabin was just as wrong to think a Palestinian state led by corrupt terrorists isn’t antithetical to the entire concept of two states for two peoples living alongside each other in peace. That was just as true for the slightly more presentable Abbas and his Fatah colleagues as it was for Arafat. This has already been amply demonstrated, first by Arafat’s use of terrorism and then by what has happened in Gaza where an independent Palestinian state in all but name already exists.

Fayyad’s tragedy was not just that both Fatah and Hamas wanted to be rid of him but that he was a man with virtually no support among ordinary Palestinians. So long as shedding Jewish blood is the main factor that gives a Palestinian political party credibility, men like Fayyad will have no chance no matter how much they are applauded by Americans or Israelis. The collapse of his effort to change Palestinian politics is therefore a key moment that should signal to the world that it must dispense with the theories of both Peres and Rabin and cease ignoring reality in favor of illusions.

That is something that groups and governments determined to keep funneling cash into the coffers of the PA and to push Israel to make concessions to it must understand. Until they do, the discussion about the peace process will continue to be a tragic waste of time and effort.

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