More than eight months have passed, and over 500 lives have been lost, since the second intifada broke out in September 2000, but few, if any, of the uprising’s original goals have been achieved. Instead, the iconic enemy of Palestinian nationalism, Ariel Sharon, was elected Israeli premier at the head of a “national unity” government with Foreign Minister Shimon Peres providing a “dovish” public relations cover. Two Arab summits held since October did little more than promise financial support for the intifada, with little of it actually materializing. US elections brought to power a new administration apparently as obsessed with the unfinished business of the Gulf war as it is averse to reprising Bill Clinton’s role in the “peace process.” Finally, the long-awaited UN Security Council vote for an international peacekeeping or protection force for the Palestinians was scuttled by a US veto on March 28. The Bush administration seconds Sharon’s rhetoric pledging no negotiations before the “violence” stops. Even the most hopeful analysts only suggest that the US has yet to formulate a clear policy toward the Israeli-Palestinian conflict. Meanwhile, settlements continue to expand and in a recent poll, 72 percent of the Israeli public supported even greater use of armed force to put down the uprising. 
The second intifada has taken place within a conjuncture of forces that are profoundly inimical to the achievement of its fundamental aim of ending Israel’s occupation of the West Bank and the Gaza Strip.  The external forces would present a formidable challenge to any anti-colonial movement. But the internal conditions of Palestinian politics are also deeply unfavorable to the uprising’s ability to reap transformative, as opposed to incremental, gains. The intifada has provided the context for a widening internal debate on the limitations of the present leadership, as well as on the need for democratic reform. But the continued absence of independent political movements capable of mobilizing a challenge based on these issues, added to the constraints imposed by the current crisis, means that a democratic transition is unlikely either during the intifada or in its immediate aftermath. Nevertheless, the Palestinian Authority (PA) is clearly at a crossroads, caught between its inability to wrest concrete political gains from the intifada and unrelenting economic, diplomatic and military pressure to “end” the uprising. This has led to a situation where the PA’s continued existence is now up for debate.
Strapped for Cash
Over the last few years, donor money, tax receipts and customs and VAT payments (once they were finally put in unified national accounts) have covered the PA’s general operating costs. Significantly, customs and VAT revenue, which are controlled by Israel, made up almost two thirds of the PA’s formal working budget. Since last autumn, Israel has refused to transfer these VAT payments, at the same time that donor emergency aid has actively bypassed the PA and been funneled through international agencies like UNWRA and UNDP. Other crucial sources of revenue — statist or state-linked business concerns in the “private sector” (e.g., the Jericho casino) and control of major commodity flows like gasoline, cement and gravel — are also now in disarray. Income from these sources had covered the costs of some of the security services, maintained the upper levels of the bureaucracy and helped to retain the loyalty of other constituencies inside and outside the West Bank and Gaza. With the disappearance of Israeli good will and the decline of Israeli and foreign tourism, income from these sources has eroded. The leadership’s decision to go along with the intifada represents a weakening of the economic elite within the PA that was implicated in these commercial concerns; many of them were considered most amenable to compromise at Camp David II. Only an estimated $15 million of the $1 billion in Arab aid promised at the October 2000 summit has arrived. The gap suggests that the Arab regimes, while anxious to deflect internal criticism by pledging monetary support to the intifada, have also been using money as a means to pressure the PA into returning to the Oslo process. 
In March 2001, UN Special Representative to the Middle East Terje Larsson held a press conference in which he warned that the PA was “on the verge of imminent collapse.” Larsson’s warning, though exaggerated, seems to have made the international “shepherds” realize that too much financial pressure on the PA might backfire: the PA could become either too radicalized or too weakened to return to negotiations. The European Community stepped in with a $15 million monthly “loan” to the PA to offset Israel’s withholding of VAT payments. In March, the second Arab summit pledged an additional monthly soft loan of $30 million over a period of six months, also to help cover civil service salaries. While the PA is still financially strapped, it has enough revenue to ensure — for a short time — the basic survival of its formal institutions.
Limitations of PA Leadership
But perhaps more significant than the budgetary crisis is the unabated criticism of the PA’s shortcomings as government. Public sentiment against the Authority’s ineptness and corruption has intensified, as most PA institutions have proven poorly equipped to respond to public needs during a national emergency. Civil defense measures from the police and security forces remain rare; instead, local municipalities carry most of the burden of dealing with physical destruction from Israeli military attacks. The PA also has remained largely absent in other areas. The PLO’s Palestine Red Crescent Society, along with NGOs like the Union of Palestinian Medical Relief Committees, have been more active in emergency medical services than the Ministry of Health. Given its financial crisis, the PA also has been unable to address the public’s mounting economic losses. In December 2000, the Ministry of Labor offered a one-time payment of 600 NIS ($150) to workers who had lost their jobs in Israel — and then this money dried up. A recent survey conducted by the Birzeit University Development Studies Program found that 81 percent of Palestinians who received cash or in-kind support during the intifada have received it from a non-PA source — either UNRWA or the alms (zakat) committees linked to religious institutions. In bearing the brunt of Israel’s economic and military war, the populace has largely been left to fend for itself.
But popular criticism of the PA has focused equally on its inability — or unwillingness — to provide a clear overarching strategy for the uprising. The same Birzeit survey found that 43 percent of respondents thought there was a need to replace the PA with a new government. (Yasser Arafat retains a higher personal approval rating — 47 percent — than any leader from the secular or Islamic oppositions.) Active resistance to the Israeli occupation appears only fitfully guided by the National and Islamic Forces (NIF), the coalition of political movements that are ostensibly leading the intifada, but which have offered little direction or vision of their own. A common refrain since October is that “there is no leadership.” Israel’s declared war against the uprising has thrown the limitations of the PA’s rule into stark relief.
By bombing the “installations” of PA security forces and assassinating individual Hamas and Fatah activists, former prime minister Ehud Barak and now Sharon have sent a message to the Israeli public that the Israel Defense Forces (IDF) remain in control. But these counterinsurgency tactics also seem directed at reinforcing a sense among Palestinians of the IDF’s almost supernatural powers of surveillance, as well as the PA’s impotence. This conscious projection of Israel’s all-engulfing power (and thus the PA’s and the population’s total dependence on it) contrasts sharply with the behavior of Israeli governments — especially Labor governments — since 1993. Oslo’s pretense that the two sides were equal “partners for peace” demanded that the PA leadership be awarded the requisite veneer of autonomy. Now the pretense is gone. Instead the clear message is that Israel controls the majority of Palestinian public funds, controls Palestinian workers’ access to their most crucial labor market and determines whether the Palestinian government, including its legislative council, can meet or not. The segmentation of Palestinian territory, including the Gaza Strip, into dozens of blockaded areas has made the practice of self-government by the PA virtually impossible. For the first five months of the intifada, Yasser Arafat was unable to “visit” the West Bank at all. Once in the West Bank, he was similarly obstructed from “visiting” the Gaza Strip. The Palestinian Legislative Council (PLC) has met only twice since October; the first attempted meeting was called off because most of its members could not reach Gaza. Israel allowed the PLC meeting in March to go ahead, in hopes that Arafat would “denounce violence,” but did not allow PLC member Marwan Barghouthi (head of the vilified tanzim in the West Bank) to attend. Ironically, this has effectively centered even more decision-making power in Arafat’s hands. The nominal institutions of collective decision-making, weak in the past, now seem almost defunct.
Strategies of Rule
At the March PLC meeting, Arafat, for the first time since the creation of the PA, spoke of the need for internal political and institutional reform, affirmed his commitment to the rule of law and raised the issue of corruption. He asserted that preparations were underway to hold long-awaited elections for local governments, chambers of commerce and mass organizations. In the world press, Arafat’s statements about reform went unnoticed, as Israel and the US focused solely on his failure to call on Palestinians “to end the violence.” Within the PA and among Palestinian political parties and the population at large, Arafat’s call for reform was seen as a response to internal discontent — though not necessarily a harbinger of things to come.
Clearly, fault lines have emerged in the strategy of rule that the leadership developed during the Oslo process. Two aspects of that strategy have particular relevance in understanding the choices that lay ahead. First, PA rule was not exercised through internally coherent government institutions empowered with specific functions within a framework of law. Rather, PA rule was largely accomplished outside of the new institutions of government and at their expense. Formal government institutions served as symbols of “statehood on the way” and as mechanisms of patronage, primarily through government employment for returning PLO exiles and crucial local constituencies. Simultaneously, the strategy of rule included the integration of structures and figures from the PLO (as representatives of the national liberation movement) into the highest levels of PA executive decision-making. Whereas the fundamental structures of the government were left inchoate and disempowered, its uppermost executive was conflated with the leadership of the national liberation movement. This conflation of the PLO and the PA, at the expense of democratically elected government representatives, is exemplified by the structure known as the “Palestinian leadership” (al-qiyada al-filastiniyya). For the past six years this structure has been the highest decision-making body in the PA. It combines the ministerial council, members of the PLO Executive Committee, the speakers of the PLC and the Palestine National Council and some of Arafat’s advisers. Such arrangements suggest that, given the deep uncertainties of Oslo, Arafat is unwilling to make the transition away from the national liberation movement to “autonomy government” before full-fledged statehood. He has often justified limiting the PLC’s powers by reference to the higher and more encompassing power of the PLO, as the representative of all Palestinians, not just Palestinians in the West Bank and the Gaza Strip, whom the institutions of the PA represent.
With this strategy and the strength of the state party, Fatah, the leadership was able to survive the early challenge of Hamas to its power. The overall system has been able to deflect (less influential) nationalist and reformist challenges due to its medusa-like power structure and the leadership’s continued ability to project nationalist legitimacy in the conflict with Israel. Their popular support declining, most PLO factions have become more dependent on the leadership since the early 1990s. As such, these factions have benefited from the representation of the PLO in the PA’s executive. In this position, PLO factions could remain a “loyal opposition” able to criticize the Oslo process (and even the PA) as long as they did so within the boundaries of the political field delineated by the leadership. Until recently — as proven by the fate of Hamas and Islamic Jihad at various times during the 1990s — it was armed struggle that lay outside the acceptable parameters of opposition to Oslo or the PA’s policies.
This strategy of rule enabled the leadership to deal with the main challenge of the indefinite interim period which followed the 1994 Declaration of Principles: how to enter a state formation process under the control and auspices of the colonial power, while retaining the mantle of the national liberation movement. To meet this challenge, the leadership needed to keep its contending political constituencies committed to (or at least not actively resisting) a deeply flawed diplomatic process. But consent, if not commitment, to the “peace process” could only be sustained if there was enough hope that Oslo would lead to the realization of full Palestinian national rights. Against all odds, the leadership kept this hope alive in the last few years by claiming that the concessions of the interim period would be recompensed by iron resolve during final status talks. The breakdown of the Oslo process at Camp David was the almost inevitable end game.
Reform or Liberation?
The end game which produced the intifada (with the help of Sharon’s visit to al-Aqsa) also exposed the tension within the PA’s identity: it is simultaneously a ruling — though not sovereign — government and the institutional heir to the national liberation movement. The longer the intifada continues without reaping diplomatic gains, the stronger the voices calling for full national liberation become, at the expense of “governance.” The emerging debates about the “internal situation” reflect the PA’s dual identity. In line with Arafat’s PLC address, there are forces that focus mainly on “reform” of the PA, advocating new elections for the PLC and local councils, and the development of the rule of law. They tend to call for an emergency government to address the particular needs of the intifada. At the opposite extreme, there are calls for the dissolution of the PA as a government, its replacement by the PLO and a return to armed struggle as the means to liberate Palestine.
Talk of reform has been around for a while, but now it is much more vocal. Many of the same groups and individuals who had attempted to develop “third way” democratic parties over the past few years (mostly figures from the left factions or NGOs, and secular independents) are currently the main purveyors of reform talk.  In some cases, earlier attempts have now crystallized into a joint political platform with strong reform content. But such initiatives have yet to finalize a political program or, more crucially, an organizational structure. The public rallies known as “popular conferences,” held in some West Bank towns in March and April by a coalition of nationalist factions, repeatedly sounded the theme of the need for internal reform: new elections, the rule of law, separation of powers and combating corruption. But most speakers did not develop these demands in any programmatic way, nor could they draw links between their stated support for continuation of the uprising and the need for government reform. None of these factions have a large, organized mass base, or a clear strategy for effecting reforms.
Fatah and the Opposition
The calls for reform emanating from within Fatah are perhaps more significant. Fatah, like most nationalist movements, brings together a wide and contradictory array of social forces. It encompasses dominant elements of the bureaucratic leadership as well as the new statist economic elite, local economic elites, top military brass and members of the security forces. Most important are its mass organizations, including its Shabiba youth wing, its women’s committee and the regular party organization or tanzim.  These mass structures tie “the street” to the leadership. But while the top political leaders of Fatah tend to be returnees from exile, the mass organizations, both in membership and leadership, tend to be from the “inside.” While in Gaza the mass organizations were largely absorbed into PA civilian and security structures, in the West Bank they remained relatively distinct from the PA. Significantly, the leadership of the mass organizations is dominated by the younger generation of mid-level cadre, who came of age during the first intifada, and acquired their current positions through democratic party elections over the past five years. This same leadership has been the driving force of the current uprising in the West Bank. 
As far back as the 1997 Fatah Regional Conference in Beit Sahour, the weaknesses of the Oslo process as the strategic means to liberate Palestine were beginning to take their toll. That conference ended with movement leaders calling for a possible return to “armed struggle,” in an attempt to hold the movement together, particularly in the face of opposition from Hamas. Following Camp David and Sharon’s fateful visit to the Haram al-Sharif, the internal tensions finally exploded and what has become known as the tanzim took to the streets. Fatah sees itself as continuing the legacy of resistance — including armed struggle — that had dominated the history of the PLO. But since Fatah is also the “ruling party,” it does not see itself in opposition to the PA but as a necessary complement to the PA’s role in negotiations. At an April 2001 roundtable in Ramallah, Marwan Barghouthi was explicit on this point: the formation of the PA is a historic achievement that needs to be protected. While asserting that “the intifada also poses a criticism of the internal situation [PA rule],” he added that reform of the government is currently impossible.
Other elements in Fatah reject Barghouthi’s moderation. The unknown group responsible for the January 2001 assassination of Hisham Mekki, the Palestine Broadcasting Authority chief known for his corruption, is widely assumed to be affiliated with Fatah. Clearly the movement’s call for preservation of the PA, while also undertaking armed resistance, creates new pressures that cannot be controlled. The recent participation of Force 17, and other security organs, in armed activities against Israel suggests that the state military apparatus finds it hard to remain a bystander while relative ingénues take over its legacy of armed struggle. The Fatah movement’s role as the vanguard of the intifada, in conjunction with its move onto the military terrain, sets in motion a rebalancing of power within the ruling elite — not outside it.
At the other end of the spectrum are the voices calling for a full-fledged return to a national liberation movement and the dissolution of the PA. These have come from two sources: Islamists and left PLO factions. Hamas and Islamic Jihad — having been the main victims of PA rule and now being major beneficiaries of the uprising — have a clear interest in such a revision of national strategy. On the left, there are those who view the intifada as an opportunity to bury the Oslo accords — which they have always rejected — and return to the framework of the PLO, where they might regain some of their lost influence. Beyond these political debates, the fate of the PA hangs in the balance of the war of nerves between the Israeli and Palestinian leaderships.
War of Nerves
One of Barak’s main strategies vis-á-vis the intifada was to prevent the PA from reverting to its liberationist roots, either in the form of the old PLO or in a new reconstructed form. This clearly had to do with the exigencies of his electoral campaign, but also reflected his commitment to Oslo as the framework through which Israel could safeguard its interests. Hence, despite the early signs of Arafat’s “reversion” — releasing Hamas and Islamic Jihad prisoners, and allowing the creation of the NIF, made up of PLO and Islamist factions — Barak’s use of repression was interspersed with invitations to negotiate.
By contrast, Sharon has mounted an international campaign to demonize the PA as a “terrorist entity,” and continually presents Arafat as an obstacle to security and peace. The current Likud discourse is like an artifact from another age. After Oslo, the word “terrorist” had been reserved for Hamas and Islamic Jihad. Now it refers to any form of Palestinian resistance to occupation, and includes the Fatah tanzim and Force 17, Arafat’s presidential guard. Sharon states that there can be no negotiations before Arafat has arrested (or rearrested) this broad panoply of “terrorists” and reinstituted security cooperation with Israel. But should talks resume, Sharon is offering nothing more than a long-term interim agreement that would keep most of the West Bank under Israeli control, retain all the settlements and defer negotiations on Jerusalem and refugees. It is obviously impossible for Arafat to agree to this, raising the question of Sharon’s intentions. Some argue that he seeks to permanently destroy the PA, burying Oslo and ending Arafat’s career. Given the constraints of international and coalition pressure, Sharon is more likely using the threat of the PA’s destruction to push Arafat back into a more amenable position. Arafat’s tactical response seems to be to send all possible signals — to the US, the Europeans and the Arab world — that he is prepared to let the entire edifice of the PA collapse, and revert if necessary to some form of armed resistance. Arguably, if all else fails, Arafat retains and probably strengthens his legitimacy by reinstating himself as leader of a liberation movement.
Most likely, an exit from the current impasse will be found before this stage is reached. The joint Jordanian-Egyptian proposal currently on the table offers an “honorable exit” based on the Sharm el-Sheikh ceasefire deal brokered by Clinton in late October 2000. It stipulates the withdrawal of Israeli forces from PA-controlled civilian areas, the lifting of internal sieges and the transfer of VAT payments owed to the PA. In return, the PA would crack down on armed resistance and gradually reenter security cooperation with Israel. Negotiations would then resume on final status issues while outstanding interim agreements by Israel would be implemented. Most crucially for the Palestinian leadership, the package includes a full settlement freeze — which the PA could present as the achievement of the uprising.
Arafat reluctantly has agreed to the Jordanian-Egyptian proposal, but Sharon has not. But growing European and UN support and favorable comments from the left wing of Labor and the US indicate that the proposal may evolve into a face-saving device for both parties. If the Jordanian-Egyptian proposal does become an exit from the current war, it is likely that reform of government will once again become the salient Palestinian political debate. But since Fatah is the only strong force to have emerged through the intifada, a new balance of power within the current system rather than the system’s radical overhaul will probably be the main outcome of the debate. There are wider debts to be paid. The immense costs of lost lives, homes and livelihoods cannot be completely ignored. The leadership probably hopes that show trials of a few corrupt PA officials and a resumption of work in Israel’s labor market after months of impoverishment will suffice. What is certain is that this intifada will leave a collective memory of government failure in the face of mass hardship. Whether the intifada will also lead to a point beyond Israel’s enduring occupation of Palestinian land has yet to be seen.
 Ha’aretz, April 4, 2001. In other findings: 79 percent of those surveyed agreed with Sharon’s policy of no negotiations before the end of violence and 53 percent believed the purpose of the intifada was simply to cause harm to Israel.
 For an overview of the backdrop to the uprising see Rema Hammami and Salim Tamari, “Anatomy of Another Rebellion,” Middle East Report 217 (Winter 2000).
 Even these mostly Saudi donations are stuck in the accounts of the Islamic Development Bank, as the Saudis and others are locked in negotiations with the PA about “development plans” and a “transparent mechanism” for the funds’ distribution. Other Gulf aid tended to wind up in the hands of Hamas, which has rebuilt its welfare institutions and, thereby, its popular support.
 In particular, figures formerly in the left factions (the PFLP, the DFLP, Fida’, the PPP and so on) can be found at the forefront of initiatives to create new parties or movements. These figures are motivated by alienation from entrenched factional leaderships (such as those in the PA executive) and the search for political relevance.
 See Graham Usher, “Fatah’s Tanzim: Origins and Politics,” Middle East Report 217 (Winter 2000).
 Many individual members of the Fatah cadres that had been absorbed into the PA in Gaza are now working under the rubric of what are called the Popular Resistance Committees, not in any official PA capacity.