But it's more insidious than that. The unsustainable bubble economy fails to capture the means of production and therefore strengthens the occupation. That's because the European donor funds (that's how the Europeans remain 'relevant' to the 'peace process' -- they pay for what Israel breaks) are meted out in salary form to sustain Fayyad's repressive police statelet.
Those salaries are then spent on regular commodity goods -- yogurt, laundry detergent, cellular phones -- that are either produced by Israel or are subject to exorbitant import tariffs. At the same time, Israel imposes anti-market, anti-competitive, protectionist economic policies in the West Bank and Gaza to prevent the genesis or development of genuine Palestinian industry. The result is a badly developed Palestinian service economy whose primary function is to consume Israeli goods.
Israeli reliance on captive Palestinian markets was on full display recently. Fayyad (to his credit) implemented a modest boycott policy in the West Bank. Palestinians were asked to avoid consuming settler goods and they did. The Yesha Council -- a settler umbrella organization -- incisively proclaimed that "this is economic terrorism." Naturally, the prospect of being prevented from exploiting Palestinian markets and the implications for colonists' standard-of-living must have been terrifying.
Fayyad's repeated refrain -- which is parroted by Thomas Friedman and others like him -- is that the chief virtue of his undignified capitulation strategy is the opportunity to enhance and grow Palestinian institutions. Netanyahu evidently doesn't see it that way.
The unelected Palestinian Prime Minister apparently directed European development monies to occupied East Jerusalem. According to the Ma'an News Agency, the donor money was used to rebuild two schools there. Fayyad was keen to celebrate his modest achievement and rented a reception hall in the city. But Yitzhak Aharonovitch -- the Israeli security minister -- banned Fayyad from entering the occupied Palestinian territory. The tragicomic irony of the situation is that Fayyad is incapable of posing a genuine threat to the Israeli occupation in any case.
But if the Palestinian Authority cannot secure economic growth, and it cannot promote Palestinian institution-building (and appears to actively destroy them), and it cannot create a Palestinian state, why does it exist?
The answer is well-known to many people: The Palestinian Authority exists to secure the Israeli occupation against Palestinian resistance (the PA killed the Goldstone report). It exists to act as an intermediary between the ruling Jewish race and the governed Palestinian race in an apartheid state.
In return, Palestinian functionaries are permitted to wrap themselves in the accoutrements of power. It's anyone's guess whether they're aware of how insulated they are from the real thing. But that's how Salam Fayyad can brunch with Secretary of State Hillary Clinton one day and find himself banned from East Jerusalem the next.
None of this would be so bad if Mahmoud Abbas and Salam Fayyad's pretence at power wasn't so destructive for the Palestinians.
People are beginning to understand that there will never be a viable Palestinian state. Today the Palestinian grassroots are organizing around a full enfranchisement movement, or the one-state solution, in Palestine/Israel.
But "regional experts" have told Robert Wright of The New York Times "that in general officials on the Palestinian side don't welcome a one-state solution because that would deprive them of the power they have now, whereas they would remain prominent during the implementation of a two-state solution."
In light of all this, it's impossible to avoid the conclusion that the Palestinian Authority must be dismantled. The so-called peace process is a farce, and the Palestinian Authority is its most farcical element. It exists to enrich a few colonially-appointed functionaries at the expense of the Palestinian people as a whole. The Palestinians will be better off in its absence.
Besides, maintaining the PA is expensive. Rather than pay the middle man to administer an occupied people, the Israelis and their American benefactors can save the difference by administering their occupation themselves. That will leave the Palestinians free to wage the society-wide civil rights struggle that will result in their freedom.
To be sure, the de-PAification of Palestine can't be a one-fell-swoop process. It would be a mistake to replicate Paul Bremer's process of de-Baathification in Iraq. One cannot abruptly cut off the salaries of so many public service employees. Instead, the Europeans will provide money to the actual authority in Palestine/Israel for salary payments (the way it used to be before Oslo). All of the heavily-armed PA militiamen will have to be retired and outfitted for real work. The challenge will be evaluating how much damage was done to the social fabric after years of palling around with Israeli Shin Bet chief Yuval Diskin and American General Keith Dayton.
The real value offered by the PA used to be the appearance of self-governance -- that's why it was worth paying for from the perspective of the Americans and Europeans. But an altered reality and an optics-indifferent Israeli Prime Minister have set the farce in bas-relief. Can anyone pretend that the Palestinians in the West Bank govern themselves when their "most powerful man" isn't permitted to attend a high school party?
It's time to let the mask slip away. Benjamin Netanyahu -- not Salam Fayyad -- is the unelected Palestinian Prime Minister. It's only by recognizing that reality that we can begin to fix our apartheid country.