When he was named to lead a government reeling from civil war in Gaza, those Palestinians who had even heard of Salam Fayyad mostly saw him as an obscure, expatriate technocrat with little feel for their troubles.

Now, a year after President Mahmoud Abbas made Fayyad prime minister in place of a Hamas leader he accused of staging a coup in the Gaza Strip, the former World Bank and IMF official is reaching out for grass roots support with a message of change.

The U.S.-trained economist, who came to power without a popular base and has clashed with some in Abbas's Fatah faction, cuts a very different figure from Palestinian leaders schooled in guerrilla warfare that has so far failed to deliver a state.

His language, too, tends to differ. He is a vocal critic of Israel's occupation and its approach to the new peace process and he acknowledges the handicaps he faces since Hamas Islamists seized Gaza last June 14, dividing the Palestinian territories.

But he says he wants ordinary people to see past the problems to improve lives and "conquer the sense of defeatism".

"Don't just argue or complain. There's a lot to even cry about," he told Reuters in an interview this week. "But we should actually act and create positive facts on the ground.

"My message is we can do things in a way that the whole world can relate to, and with respect, to enhance our cause."

WESTERN BACKING

Backed by the United States and its allies, who lifted sanctions when Abbas dismissed a Hamas-led administration elected in 2006, Fayyad has worked closely with aid donors to rejig public finances and promote investment to foster growth.

His use of the term "facts on the ground", long associated with Israeli moves to take land while waiting for negotiations to conclude, is designed to press fellow Palestinians not to wait but to take responsibility for improving their own lot.

"Now we're using the term in a different way to create positive facts on the ground in response to our needs to be free," said Fayyad, who has won warm praise from U.S. and other international officials. "Who can take issue with that?"

In fact, he is not short of critics -- both in Israel and at home, not least within Abbas's Fatah faction among those he is trying to push off the public payroll and those who worry he may seek to run against them in a future presidential election.

That is a fear the 56-year-old Fayyad is keen to dispel.

"I'm not running for elections for any position," he said.

Fayyad first entered public life as finance minister in 2001 under late Fatah leader Yasser Arafat. Abbas brought him back as finance minister in a unity government that lasted three months before it collapsed amid the faction fighting in Gaza last June.

NO TO STATUS QUO

Since then, Fayyad says his motto has been "build a state despite the occupation", a policy that nonetheless has seen him loudly demand a lighter touch from Israel to help the economy.

"The status quo is about disaster, misery," he said.

Fayyad says he is taking a "bottom-up approach" to getting his message over, touring villages and refugee camps to listen to complaints and to publicize a program of community projects that includes enlarging schools and digging wells.

"When I go and talk to people, what I'm looking for is a change in the mindset of the people away from defeatism. You need to reinforce this shift in the mindset with deliverables and act on it quickly to make a difference," he said.

His efforts to build security forces that can persuade Israel and its allies that Palestinians can keep to any deal to curb violence in return for statehood, have also been marked by a readiness to get to know not only the generals but the troops.

How far he has succeeded remains to be seen. Popular opinion remains divided on a prime minister many, particularly in Fatah, see as bent on slashing the central subsidies and grants that many Palestinians have come to depend on over the decades.

"There are mixed feelings about what Fayyad is doing," said analyst Abdel-Majid Sweilem. "There are those who see him as the IMF man implementing its directives, and there are those that see him act on his promises and has made a difference.

"But he certainly has a program. He believes that people can confront occupation by making people stay put on their land without political submissiveness, and without using violence."

For now, Palestinians' political future remains hazy, with Hamas in control and isolated in Gaza and Abbas dominating the West Bank and negotiating, with difficulty, with Israel.

Abbas has proposed bringing forward elections from 2010, though few see that as practical for now. Whenever Palestinians vote, Fayyad and his policies may play a crucial role, though Fayyad himself is adamant he has no personal political ambition.

"I will not run for presidency or for any other position," he said. "Once I leave this position I'll be doing something totally different."

(Editing by Alastair Macdonald and Samia Nakhoul)