Yet Fayyad, an economist by trade and a pragmatist surrounded by ideologues, refuses to give up.
In an interview at his office Sunday, he said he'll keep trying to improve life in the West Bank in small steps, regardless of the fate of the US-backed peace efforts.
He hopes to break what he described as a culture of defeatism among Palestinians, nurtured by decades of Israeli occupation, and instead to instill a sense of the possible. "The way we end it (occupation) is by this ... spirit of positive defiance, to build despite the occupation, do what we can," he told The Associated Press.
Among his achievements, he listed a greater sense of security in the once chaotic West Bank cities, more transparent government and a recent international investors' conference where business deals worth hundreds of millions of dollars were signed.
Yet a year after being appointed by Palestinian President Mahmoud Abbas, in response to the violent takeover of Gaza by the Islamic militant Hamas, Fayyad's list of troubles seems to be getting longer.
Hamas remains entrenched in Gaza, while Abbas' increasingly disgruntled Fatah movement is becoming more vocal in demands to be included in Fayyad's government of independents and experts. Israel balks at easing movement restrictions — a prerequisite for the recovery of the Palestinian economy — and Israeli soldiers continue to carry out raids in cities where Fayyad's forces are trying to establish control.
On Sunday, Palestinian police exchanged fire with car thieves, Nablus governor Jamal Muhaisen said. Six civilians and a police officer were wounded.
"He is doing well, but the outcome of his efforts will be humble because the reality is much stronger," said political scientist Bassem Zubaidi. "Israel is not easing restrictions on the Palestinians and wants to control their life .... and you have Fatah and Hamas fighting for power, and both wouldn't let him succeed."
Israel says it needs a network of roadblocks and checkpoints to stop Palestinian attackers.
No political ambitions
Fayyad, a former official at the International Monetary Fund who lived in the US for 20 years, has been something of an oddity since being drafted into Palestinian politics in 2001, as finance minister meant to rein in the freewheeling spending of Abbas' predecessor, the late Yasser Arafat.
Fayyad peppers his speech with economic lingo, using phrases such as "tangible deliverables," and appears uncomfortable with the backslapping ways of Fatah old-timers. Yet more than other politicians, he often leaves the confines of government seat Ramallah and tours the West Bank to campaign for his policies.
In recent days, he's faced a growing Fatah rebellion for refusing to give government jobs to party veterans who haven't lost their sense of entitlement despite their massive 2006 election defeat to Hamas and their failure to reform the ailing movement. Fayyad wouldn't discuss the issue Sunday, but it appears Abbas is standing by him — for now — by joining Fayyad's Cabinet for a special session Wednesday.
Fayyad said he has no political ambitions, such as seeking the presidency once Abbas steps aside.
"I am really focused on this (being prime minister), and I'm not really looking for any political career after what I am doing right now," he said. Polls suggest that's a smart choice, since he'd likely lose to more popular contenders, such as Palestinian uprising leader Marwan Barghouti, jailed for life by Israel.
Fayyad said the biggest failure of the past year has been the continued split between the West Bank and Gaza. "That's about the only thing on my mind on the anniversary," he said.
Gaza has been almost completely cut off from the world by Israel and Egypt, plunging its 1.4 million residents deeper into poverty. Repeated fighting between Hamas and Israel further jeopardizes peace prospects, and the rival governments in the West Bank and Gaza have engaged in increasingly hostile rhetoric.
Abbas has said he'll only deal with Hamas if the militants first step aside in Gaza. Fayyad said he's ready to talk to Hamas now, but only about finding ways of restoring Abbas' control over Gaza's security forces — and that drew an immediate rejection from Gaza's rulers.
"Salam Fayyad and his people serve the American interests in the region, not the Palestinian interests," said Fawzi Barhoum, a Hamas spokesman. "If he wants reconciliation, he needs to quit the American program and join the program of resistance."
'Firm stand needed'
Fayyad, meanwhile, is skeptical about Palestinian prospects for independence.
The peace process is "being trampled upon" with Israel's accelerated settlement construction, including the latest plans, disclosed Sunday, for 900 more apartments in disputed east Jerusalem, he said.
"Believe me, I would want this (an agreement) to happen today before tomorrow, but I am really at a loss trying to really find reasons to be encouraged or optimistic, especially because the pace (of construction) has picked up so much," he said. Both sides claim the area of Jerusalem where the building is to take place.
He said the international community must take a firm stand, but stopped short of criticizing the Bush administration, the only mediator powerful enough to call Israel to order.
Fayyad said his biggest mission has been to try to change attitudes, instill a sense of hope, by taking small steps, such as a gradual deployment of Palestinian security forces in some West Bank towns.
He said he took a political risk by doing so, since Israel did not promise to stay out of those cities, and continued Israeli army raids undermine his credibility. Israel says the Palestinians aren't ready yet to handle security on their own.
Still, Fayyad said he had no choice, since the chaos on West Bank streets had become unbearable, and residents in the cleaned-up towns are now feeling safer. Those gradual successes "give us a much better ground from which to argue our case than to continue to debate it," he said.