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The Palestinian Authority has historically been associated with the PLO, with whom Israel negotiated in the Oslo accords; as such, it had been headed so far by Yasser Arafat, and manned almost exclusively by PLO officials, most of them locals who have participated in the Tanzim (Operations), PLO's militant branch established for the First Intifada.
In 2003, Arafat gave in to international pressure, and appointed Mahmoud Abbas (Abu Mazen) as "prime minister" of the PA. Both Israel and the US refuse to negotiate deals with Arafat, whom they regard as linked to terrorists. Arafat was leader of the PLO, regarded by some Western analysts as a "terrorist" group despite its observer status at the United Nations.
Arafat's administration was characterized by the lack of democracy, by the wide-spread corruption among officials, and the division of power among families and among the numerous governmental agencies with overlapping functions. Thus, Yasser Arafat controlled through various mechanisms no less than 8 distinct security organizations, and his education ministry boosts more than 20 chairmen. After a single round of elections in 1996, which he won by a land-slide, Arafat cancelled elections for an indefinite period; some would claim that the resulting structure bears a strong resemblance to the dictatorial Middle Eastern regimes, implementing the mantra: "one man, one vote, once."
In spite of attempts to pre-empt the PLO (and Arafat personally) from the West Bank and Gaza in the 1970s and the 1980s, both the Western powers and Israel had decided by the time of the Oslo Accords that Arafat's presence would be the least of evils, providing a certain degree of stability and keeping at bay the influence of Islamists (Islamic fundamentalists). Following the Second Intifada (below), both American and Israeli leaders declared they lost trust in Arafat as a source of stability. This began a push for change in the Palestinian leadership. Democratization is held to be the optimal way to achieve such a change, although it is unlikely to take place with PLO men in positions of power.
Overall, the divide et impera scheme implemented by Arafat personally, guaranteed that in the atmosphere of power-struggle forever present in the Authority, he was always able to control the antagonists by pushing them down with the help of his comrades; an added value is that he was able to create a smoke-screen over his actions, by asking his subordinates for something, and then at worst claiming that they did so spontaneously, as a part of their struggle with their comrades. Members of the hierarchy are encouraged for their membership via the distribution of power, goods and means of income (such as controlling the taxation of some kind of activities).
While granting the above-mentioned advantages, this scheme also meant that Arafat's overall control had diminished, parts of it being split among his subordinates. This in turn means that he was less able to cope with non-PLO organizations, mainly the Islamic militant movements Hamas and Palestinian Islamic Jihad. While on the street, PLO and the movements are often at odds, there's a higher-order relationship among them when it comes to external affairs, in which Arafat gets to regulate the movements' activities (in particular, violence against Israel), for the sake of what he calls "Palestinian national interest", in return for protecting them. See PLO and Hamas for more discussion on this relationship. However, the Islamic movements do enjoy a great degree of independence when it comes to internal affairs, and so after Arafat's demise as the oracle of this "national interest", they may become openly hostile to the PLO.
Since the beginning of the Second Intifada, a growing number of Palestinians have stopped accepting the Palestinian Authority as a representative of the Palestinian people. Some claim that has become a tool of the Israeli government, and that Hamas and Palestinian Islamic Jihad represents the Palestinian interest more loyally. However, polls indicate that the Israeli attack on the West Bank since the spring of 2002 has strengthened the standing of Arafat among the Palestinian people.
Israel, on the other hand, has accused the Palestinian Authority of ignoring and covertly sponsoring the waves of violence towards the Israelis. Israeli experts claim that Arafat specifically intended to lose authority in favor of the Islamic movements, so that he could still use terrorism without actually controlling it. The prolonged support and participation of his own private militia, the Fatah, in terrorist attacks, reinforces that claim. This view has been officially accepted by the United States in summer 2002, which decided then to halt most sorts of negotiations with the current Palestinian authority, pending a fundamental organizational change. The non-governmental American Council on Foreign Relations has declared the Palestinian Authority under Arafat a haven for terrorism.
During the Intifada, Israel has often targeted Palestinian Authority personnel and resources, whom they accuse of harboring terror. In particular, many of the people arrested, assassinated or killed in action because of their terrorist activities were employees of the Palestinian authority's security forces or militias. In Operation Defensive Shield Israel has captured documents that allegedly prove that the Palestinian Authority officially sponsors terrorist activities, which are carried out by its personnel as "shadow jobs". For instance, Israel arrested Marwan Barghouti, a prominent leader of Fatah, for his role as leader of the Al-Aqsa Martyrs' Brigades.
Israel has also targeted Palestinian Authority infrastructure; in particular it has closed and destroyed parts of the Palestinian sea and air ports, that were used, as it claimed, to transport terrorists and their equipment. Israel's incursions during the Intifada also led to damage to some of the Palestinian computer infrastructure, though it is not clear to what extent it was deliberate.
These moves were criticized by the Palestinians, who claim that the Palestinian Authority is nearing collapse, and is no longer able to carry out its internal and external obligations. Israel claims that that the current Palestinian Authority is fradulent and impossible to trust, and hence no longer relevant to achieving a future peace agreement.
On July 7, 2004, the Quartet of Middle East mediators informed Ahmed Queria, Prime Minister of the Palestinian Authority, that they are "sick and tired" of the Palestinians failure to carry out promised reforms: "If security reforms are not done, there will be no (more) international support and no funding from the international community" (Reuters)
On July 18, 2004, United States President George W. Bush stated that the establishment of a Palestinian state by the end of 2005 is unlikely due to instability and violence in the Palestinian Authority. (Le Figaro)
Following Arafat's death on November 11, 2004, Rawhi Fattuh, leader of the Palestinian Legislative Council became Acting President of the Palestinian Authority as provided for in Article 119 of Constitution of the State of Palestine.
Elections for a new president have been announced for January 9 2005.