One of the big developments over the weekend was the resignation of Palestinian Prime Minister Salam Fayyad.

Of course, he has tried to resign before—I think there’s a quota for Palestinian civil servants to threaten retirement–but this time, the resignation was accepted. There are some diverging views on the significance of this, but the short of it is that this is bad for Israel, bad for the United States, bad for the Palestinians, and bad for the peace process.

While today it’s being reported that Palestinian President Mahmoud Abbas may delay naming a successor to keep Fayyad around through an American push at reviving peace talks, the ultimate departure of Fayyad, will create a deficit between Israel/the international community and the Palestinians in the most important domain: trust.

Fayyad, a Western-educated technocrat and economist with a Ph.D from the University of Texas no less, had a vision for a Palestinian state and he predicted it would exist by August of 2011. He saw a Palestine built by Palestinians. Gone from the language was a fixation with destroying Israel that had set back the Palestinian cause for more than half a century. As Ben Birnbaum noted last year, at the start of 2010, it started to look possible as the vision took root.

Six months earlier, with decades of negotiations and armed conflict having failed to produce Palestinian independence, Fayyad had proclaimed a bold new strategy: Instead of waiting for Israel to grant them a state, the Palestinians would build it themselves—brick by brick, institution by institution. Fayyad’s “state-building program,” as it was known, had earned praise from the likes of Israeli President Shimon Peres (who called him the “Palestinian Ben Gurion”) and The New York Times’ Tom Friedman (who coined the term “Fayyadism” to describe “the simple but all-too-rare notion that an Arab leader’s legitimacy should be based not on slogans or rejectionism or personality cults or security services, but on delivering transparent, accountable administration and services”). Even some right-wing Israeli politicians had spoken favorably of Fayyad, especially when comparing him with Yasir Arafat or Hamas.

More significantly, polls showed that Fayyad was winning over Palestinians—and it was easy to understand why, since his policies were yielding results. With the world still in the throes of the global financial crisis, the West Bank economy had enjoyed two years of double-digit growth. Unemployment had declined as thousands of Palestinians went to work building new schools, health clinics, and government offices. Cities like Ramallah and Jenin, which became war zones during the second Palestinian intifada, had begun to assume an air of normalcy as masked gunmen gave way to newly trained Palestinian police.

But things got tricky. As a political independent bent on transparency, a rivalry between Fayyad and Palestinian President Mahmoud Abbas (and his Fatah Party) developed. Fayyad was undercut not only by Abbas and Fatah, but by Hamas, which accused him of sanitizing the Israeli occupation. When Israeli Prime Minister Benjamin Netanyahu imposed a ten-month settlement moratorium, Abbas squandered the bulk of it by refusing to negotiate. Netanyahu also undermined Fayyad by not doing enough to limit the settlements, which stunted Fayyad’s momentum.

But the main narrative here is that Fayyad was most undone by Abbas. Over the weekend, Barak Ravid explained what caused the resignation and why it may hasten the end for the Palestinian Authority born of the Oslo peace plan:

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.

Nevertheless, the blame was leveled at Fayyad. So now what? Over at Commentary, Jonathan Tobin has a sobering take on what this all means.

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.

We’ll see ripples from Fayyad’s departure in the coming weeks, particularly if Fatah-Hamas reconciliation talks begin. But for now, Western mourning begins.

Palestinian prime minister, Salam Fayyad, resigns [WaPo]