On August 31, the night before President Obama’s dinner inaugurating direct talks between Israeli and Palestinian leaders, Hamas gunmen shot and killed four Jewish settlers in Hebron, the West Bank’s largest and most populous governorate. The attack—the deadliest against Israeli citizens in more than two years—was condemned by Palestinian and Israeli officials, who said that it was meant to thwart the upcoming negotiations. According to a Hamas spokesman, however, the shooting had a more specific purpose: to demonstrate the futility of the recent cooperation between Israeli and Palestinian security forces. This cooperation has reached unprecedented levels under the quiet direction of a three-star US Army general, Keith Dayton, who has been commanding a little-publicized American mission to build up Palestinian security forces in the West Bank.

Referred to by Hamas as “the Dayton forces,” the Palestinian security services are formally under the authority of Mahmoud Abbas, the Palestinian president and chairman of Hamas’s rival, Fatah; but they are, in practice, controlled by Salam Fayyad, the unelected prime minister, a diminutive, mild-mannered technocrat. Abbas appointed Fayyad following Hamas’s grim takeover of Gaza in June 2007—which occurred seventeen months after the Islamist party won the January 2006 parliamentary elections—and entrusted him with preventing Hamas from also seizing the West Bank.

Fayyad received a Ph.D. in economics from the University of Texas at Austin and held positions at the Federal Reserve Bank of St. Louis, the World Bank, and the IMF before becoming finance minister under President Yasser Arafat. His reputation as a fiscally responsible and trustworthy manager ensures the steady supply of international aid on which the Palestinian economy depends. Though he has neither a popular following nor backing from a large political party (his Third Way list received a mere 2.4 percent of the votes in the 2006 legislative elections), today he is responsible for nearly every aspect of Palestinian governance. Yet he is not participating in the negotiations over a settlement with Israel, which are the province of the PLO (of whose leadership Fayyad is not a member) and are handled by its chairman, the seventy-five-year-old Abbas.

Fayyad is criticized at home for many of the same reasons he is lauded abroad. He has condemned violence against Israel as antithetical to his people’s national aspirations, stated that Palestinian refugees could be resettled not in Israel but in a future Palestinian state, and suggested that this state would offer citizenship to Jews. He is praised in the opinion pages of The Washington Post, The Wall Street Journal, and The New York Times, and has good relations with foreign leaders unpopular in Palestine: on Fayyad’s first visit to the Oval Office, in 2003, George W. Bush greeted him with index and pinky fingers extended to display UT Austin’s “Hook ‘em Horns” sign. When the daughter of Israeli Prime Minister Ariel Sharon’s chief of staff was married several years ago, Fayyad sat next to Sharon at the wedding and talked with him at length.

In February, Fayyad spoke before Israel’s security establishment at the annual Herzliya Conference, where he was compared by Israeli President Shimon Peres to David Ben-Gurion.Much of Fayyad’s speech concerned his ambitious plan, made public in late August 2009, to establish unilaterally a de facto Palestinian state by August 2011. By that time, according to Fayyad, “the reality of [a Palestinian] state will impose itself on the world.” Fayyad’s plan to “build” a state—he does not say he will declare one—has been endorsed by the Quartet (the US, EU, UN, and Russian Federation) and supported eagerly by international donors.

Some Palestinians have rejected it as too closely resembling Israeli Prime Minister Benjamin Netanyahu’s notion of “economic peace,” which proposes that development precede independence. And a number of Israelis have expressed suspicions that Palestine will seek UN recognition of its statehood when the plan is complete. Avigdor Lieberman, the Israeli foreign minister, has warned that any unilateral steps Fayyad takes toward a state could prompt Israel to annul past agreements and annex parts of the West Bank.

Fayyad has said that his plan to build a new state “is intended to generate pressure” on Israeli–Palestinian negotiations, and the direct talks recently started by the two parties have a late summer 2011 deadline that coincides with Fayyad’s. Mike Herzog, former chief of staff to Israeli Defense Minister Ehud Barak, told me, “Ultimately, I think Fayyad calculates that political negotiations will not succeed and his plan [to establish a state] will be the only game in town.” The danger, for Israel and the Palestinian Authority alike, is what will happen if negotiations fail and Fayyad’s plan does not produce significant concessions from Israel. “We are not going to withdraw from certain areas just because there was a declaration or a UN resolution,” Herzog said. In that event Hamas will be able to present a persuasive argument that violence is the only means of achieving national liberation. “Fayyad sets an arbitrary date and says, ‘Okay, now all of you break your heads if you want to avoid a catastrophe,’” Herzog said. “What he did is very risky but also very smart.”

So far, Fayyad’s strategy is succeeding. His administration has started more than one thousand development projects, which include paving roads, planting trees, digging wells, and constructing new buildings, most prominently in the twin cities of Ramallah and al-Bireh. He has reduced dependence on foreign aid and started to carry out plans to build new hospitals, classrooms, courthouses, industrial parks, housing, and even a new city, Rawabi, between Ramallah and Nablus. But “reforming the security forces,” Ghassan Khatib, a spokesman for the Palestinian Authority, told me, “is the main and integral part of the Fayyad plan. Many of the government’s other successes, such as economic growth, came as a result.

To its citizens, Fayyad’s government has presented reform of the police and other security forces as principally a matter of providing law and order—apprehending criminal gangs, consolidating competing security services, forbidding public displays of weapons, and locating stolen cars. But its program for “counterterrorism”—which is directed mainly against Hamas and viewed by many Palestinians as collaboration with Israel—is its most important element: targeting Hamas members and suspected sympathizers is intended to reduce the likelihood of a West Bank takeover and, as important, helps Fayyad make a plausible case that he is in control and that Israel can safely withdraw from the territory.

In 2009, Palestinian and Israeli forces took part in 1,297 coordinated activities, many of them against militant Palestinian groups, a 72 percent increase over the previous year. Together they have largely disbanded the al-Aqsa Martyrs Brigades, a principal Fatah militia; attacked Islamic Jihad cells; and all but eliminated Hamas’s social institutions, financial arrangements, and military activities in the West Bank.

According to the latest annual report of the Shin Bet, Israel’s FBI, “continuous [counterterrorist] activity conducted by Israel and the Palestinian security apparatuses” reduced Palestinian attacks against Israelis in the West Bank and East Jerusalem to their lowest numbers since 2000. Today’s level of cooperation, Herzog said, “is better than before the second intifada even—it’s excellent.” Mouna Mansour, a Hamas legislator in the Palestinian Parliament and widow of an assassinated senior leader of the movement, told me, “The PA has succeeded more than the Israelis in crushing Hamas in the West Bank.

At the center of the Palestinian government’s security reforms are several “special battalions” of the National Security Forces (NSF), an eight-thousand-member gendarmerie that makes up the largest unit of the 25,000-strong Palestinian armed forces in the West Bank. The officer in charge of the vetting, training, equipping, and strategic planning of these special battalions is Lieutenant General Keith Dayton, the United States security coordinator (USSC) for Israel and the Palestinian Authority.

In a desert town sixteen miles southeast of Amman, more than three thousand Palestinians have completed nineteen-week military courses under Dayton’s supervision at the Jordan International Police Training Center, built with American funds in 2003 for the instruction of Iraqi police. In Hebron, Jenin, Jericho, and Ramallah, the Dayton mission is organizing the construction and renovation of garrisons, training colleges, facilities for the Interior Ministry, and security headquarters—some of which, like the one I visited on a hilltop in central Hebron, were destroyed by Israel during the second intifada. The office of the USSC plans to build new camps in Bethlehem, Ramallah, Tubas, and Tulkarm. It offers two-month leadership courses to senior PA officers, and has created and appointed advisers to a Strategic Planning Directorate in the Ministry of Interior. Over the past three years, the State Department has allocated $392 million to the Dayton mission, with another $150 million requested for 2011.

At its headquarters in a nineteenth-century stone building at the US consulate in West Jerusalem, the USSC has a forty-five-person core staff composed primarily of American and Canadian but also British and Turkish military officers. In addition, it employs twenty-eight private contractors from the Virginia-based DynCorp International. State Department rules require the mission’s US government staff to travel only in large, heavily armored convoys, though these restrictions do not apply to its private security contractors and foreign military officers, some of whom are based in Ramallah. By late 2011—a date that dovetails with Fayyad’s deadline—the USSC plans to have supervised the training of ten NSF battalions, one for every West Bank governorate except Jerusalem.

General Dayton reports to Secretary of State Hillary Clinton and Admiral Mike Mullen, chairman of the Joint Chiefs of Staff. He advises George Mitchell, special envoy for Middle East peace, and has been praised by influential senators, congressmen, and Middle East analysts, who view the work of the USSC as a singular achievement. Israel has granted greater responsibility to Palestinian security forces, expanding their geographical areas of operation, sharing higher-quality intelligence with them, and lifting their midnight-to-five-AM curfews in several of the largest West Bank cities. According to the UN Office for the Coordination of Humanitarian Affairs, Israel has also reduced the travel time between most urban centers in the West Bank by opening roads, relaxing controls at checkpoints, lifting vehicle permit requirements, and removing physical obstacles, which are expected to be reduced in the near future to their lowest number since 2005.

Colonel Philip J. Dermer, a former member of the USSC, wrote in a March 2010 report circulated among senior White House and military staff that “the USSC mission has arguably achieved more progress on the ground than any other US effort in Israeli- Palestinian peacemaking”. Michael Oren, Israel’s ambassador to the United States, has said, “You can send George Mitchell back and forth to the Middle East as much as you like, but expanding what [General] Dayton is doing in the security realm to other sectors of Palestinian governance and society is really the only viable model for progress.”

The first United States security coordinator, Lieutenant General William “Kip” Ward, arrived in Jerusalem in March 2005. Elliott Abrams, formerly the deputy national security adviser to President George W. Bush, told me that Ward’s mission was organized in response to three closely coinciding events: the reelection, in November 2004, of Bush, who wanted to rebuild Palestinian security forces as a part of his 2003 road map to Middle East peace; the death, nine days later, of Yasser Arafat, who had resisted American attempts to reform the Palestinian security services; and the victory of America’s favored candidate, Mahmoud Abbas, in the January 2005 presidential election.

Ward’s mission concentrated initially on security reform but was soon limited to preparing for Israeli Prime Minister Sharon’s disengagement from Gaza and four northern West Bank settlements in August and September 2005. The withdrawal went fairly smoothly for Israel, but Ward failed to prevent violence on the Palestinian side. Settler greenhouses were looted, empty synagogues were burned, and Palestinians began fighting one another for control of Gaza.

Weeks after Dayton took over from Ward at the end of 2005, Hamas defeated Fatah in the January 2006 parliamentary elections. Overnight, Dayton’s task changed from reforming the security forces to preventing a Hamas-led government from controlling them. State Department lawyers sought ways to continue assisting the Fatah-dominated security forces of the Palestinian Authority, which would soon be led by Hamas, a group the US had declared a terrorist organization. The solution was to send direct aid to President Abbas, who was elected separately and could be considered detached from the incoming Hamas-led government and legislature. In a reversal of its longstanding policy of pressuring the Palestinian president to give power to the cabinet, the US advised Abbas to issue decrees and make appointments that would limit the new government’s rule, particularly over the security forces. Hamas reacted by establishing a security service of its own. Abbas banned the Hamas force in a decree that the cabinet then declared illegal. During the next year, Hamas and Fatah engaged in a series of violent clashes in which leaders on both sides were assassinated.

Dayton, meanwhile, was overseeing the recruitment, training, and equipping of Abbas’s rapidly expanding security forces. Khaled Meshaal, chief of Hamas’s politburo, delivered a fiery speech denouncing “the security coup” as a “conspiracy” supported by “the Zionists and the Americans”—charges Fatah denied. In February 2007, on the brink of civil war, Fatah and Hamas leaders traveled to Mecca, where they agreed to form a national unity government, a deal the US opposed because it preferred that Fatah continue to isolate Hamas. Fayyad became finance minister in the new government, despite, he says, American pressure not to join. The Peruvian diplomat Alvaro de Soto, former UN envoy to the Quartet, wrote in a confidential “End of Mission Report” that the violence between Hamas and Fatah could have been avoided had the US not strongly opposed Palestinian reconciliation. “The US,” he wrote, “clearly pushed for a confrontation between Fateh and Hamas."

One month before Gaza fell to Hamas in June 2007, Hamas forces attacked USSC-trained troops at their base near Gaza’s border with Israel, killing seven and withdrawing only after three Israeli tanks approached. Testifying before Congress the following week, Dayton claimed that the attack had been repulsed and denied that Hamas was on the rise—a prediction not borne out during the following weeks. “It took [Hamas] just a few days,” said Raji Sourani, director of the Palestinian Center for Human Rights, “to flush away a 53,000-strong PA security apparatus which was a fourteen-year Western investment.”

Though several members of the Bush administration later said that the entire strategy had been mistaken, the defeat of American-backed Fatah forces offered a rather different lesson to the small circle that had influence over the USSC. “We didn’t regard this as proof the project wasn’t working,” Abrams said, “but rather that the project was needed.”

Gaza was lost, but in Abbas’s appointment of an emergency cabinet led by Salam Fayyad, the US felt it had “the best Palestinian Authority government in history.” So I was told by David Welch, a former assistant secretary of state for Near Eastern affairs who helped oversee the Dayton mission until December 2008. The Bush administration ended its fourteen-month embargo of the PA, Israel released $500 million in withheld taxes, Palestinian and Israeli security forces increased their coordination, and the USSC rapidly expanded its operations. In Fayyad’s first three and a half months as prime minister, from mid-June to October 2007, the Palestinian Authority mounted a campaign in the West Bank against charities, businesses, preachers, and civil servants affiliated with Hamas, arresting some 1,500 of the movement’s members and suspected sympathizers. “Once it became clear that Hamas had won in Gaza,” Welch said, “then the whole thing was a lot cleaner to do in the West Bank.”

By late October 2007, the government was making an intensive effort to maintain order in Nablus, one of the West Bank’s most violent cities; in Jenin the following May a special battalion trained by the USSC led the largest security operation ever mounted by the PA.Both efforts won approval from local residents, who were grateful for improved security. But these projects were largely dependent not only on restraint by Hamas and Islamic Jihad but also on Israel’s support, including the amnesty it offered to Fatah gunmen.

Many Palestinians see today’s campaigns by the security forces as an effort to suppress Hamas—the victors in free and fair elections—and also to prevent attacks against Israel. “The challenge for Fayyad and Abbas,” Ghaith al-Omari, a former foreign policy adviser to Abbas, told me, “is that for many Palestinians violence against Israel is a nationalist, respectable endeavor.” This is a view confirmed by reactions to the most recent suicide bombing in Israel—at a Dimona shopping center in February 2008—and the shooting one month later of eight students at a yeshiva in West Jerusalem. More than three quarters of polled Palestinians supported the attacks, which were praised by Hamas and condemned by the PA.

Over the following year, the PA alienated itself from the public still further and with little aid from Hamas. At an Israeli base north of Ramallah in September 2008, the Israeli journalist Nahum Barnea attended a meeting between Palestinian and Israeli commanders. In an article later translated in the Palestinian press, Barnea reported in Yedioth Ahronoth, Israel’s most widely circulated newspaper, that the head of the Palestinian National Security Forces told the Israelis, “We have a common enemy,” and the chief of Palestinian military intelligence said, “We are taking care of every Hamas institution in accordance with your instructions."

Another blow to the PA’s popularity came one and a half months later. After Israeli forces evicted some two hundred Jews from a contested building in Hebron, Israeli settlers in the area vandalized ambulances and mosques, set fire to cars and homes, and shot and wounded Palestinian residents. Prime Minister Ehud Olmert said he was “ashamed at the scenes of Jews opening fire at innocent Arabs,” an event he called a “pogrom. When the riots spread to the Palestinian-controlled part of the city, Hebron locals watched as their security forces quietly disappeared. Both the former governor, now Abbas’s chief of staff, and the NSF commander of Hebron, a Hamas stronghold, told me that Israeli soldiers regularly make incursions into PA-controlled areas, forcing, the governor said, “humiliated and insulted” Palestinian troops to withdraw to their barracks. Perceptions of collaboration are heightened, they added, by Israel’s frequent practice of arresting people who have just been released from Palestinian detention.

The most damage to the reputation of the Palestinian security forces occurred during the Israeli war in Gaza, which began in December 2008. In plainclothes and uniform, PA officers in the West Bank surrounded mosques, kept young men from approaching Israeli checkpoints, arrested protesters chanting Hamas slogans, and dispersed demonstrators with batons, pepper spray, and tear gas. The trust between Israeli and Palestinian forces was so great, Dayton said, that “a good portion of the Israeli army went off to Gaza.” Barak Ben-Zur, a former head of counterterrorism in Israeli military intelligence and later special assistant to the director of the Shin Bet, told me that “in Israeli Arab cities there were more protests against the war than in the West Bank,” thanks to the “total quiet kept by the Palestinian security services.” Foreign Minister Avigdor Lieberman later said, “Mahmoud Abbas himself called and asked us, pressured us to continue the military campaign and overthrow Hamas.”

Several months after the war in Gaza, Dayton spoke before an influential group of politicians and analysts at the Washington Institute for Near East Policy, where he boasted of his mission’s accomplishments: building a force that worked against Hamas and cooperated with Israel during the war, and creating “new men” through USSC training of Palestinian troops. Israeli commanders, he said, asked him how quickly he could produce more.His comments were not well received in Palestine, where they reinforced the image of the US and Israel as puppeteers. In the months following the speech, the PA sent a formal complaint to the US about Dayton’s “unacceptable declarations”; senior Palestinian officials, including Fayyad, refused to attend meetings with Dayton; and, according to Jane’s Defence Weekly, “owing to tensions in the relationship between [General] Dayton and the civilian Palestinian leadership, his role [was] scaled down.”

For Fayyad, Dayton’s speech could not have been timed more poorly; it followed the release of a widely publicized poll that had found the PA’s legitimacy among West Bank residents at record lows, and occurred just weeks after Palestinians held large demonstrations protesting an alleged attempt by PA security forces to assassinate Sheikh Hamed al-Beitawi, a prominent Hamas leader in the West Bank. Beitawi, a member of the parliament, chairman of the Palestinian Islamic Scholars Association, and a cleric well known for his sermons at Jerusalem’s al-Aqsa mosque, had escaped a separate attack by unidentified assailants in the autumn of 2008. The PA banned him this summer from preaching and two of his sons have been arrested since July. Yet Beitawi said he was confident that the Fayyad government would not last. “Fatah and the PA are going down for two reasons,” he told me in Nablus: “corruption and coordination with the Israelis.

Last December, when Israeli forces in Nablus, allegedly acting on a tip from PA security services, killed three Palestinian militants suspected of murdering a West Bank rabbi, more than 20,000 Palestinians attended the funeral, which turned into an enormous protest against the PA’s security cooperation with Israel. Several days later, Hamas’s al-Aqsa TV broadcast a cartoon with a chorus singing, “We swear that we will not be terrorized by Dayton.” Its central character, Balool, is a Palestinian National Security Force commander who kisses the boots of Israeli soldiers, wears a beret bearing the insignia “Dayton,” and claims not to represent any political faction just before his pants fall to reveal underwear colored in Fatah’s yellow.

On the day the cartoon was shown on television, Abbas, who is depicted in it as an Israeli soldier’s marionette, told an interviewer, “We are not Israel’s security guards. A week later, Yusuf al-Qaradawi, the Doha-based television preacher who is watched by an audience of tens of millions, said in a sermon broadcast on Qatar TV that “if it is proven that [Abbas] incited Israel to strike Gaza, he deserves not merely to be executed, but to be stoned to death.”

Islamists have hardly been the only critics of Dayton and the security forces. Last year, in an Op-Ed entitled “Jericho’s Stasi,” Bassem Eid, head of the Palestinian Human Rights Monitoring Group, wrote, “I would like to suggest that General Dayton not just train agents in the use of weapons, beating and torture…but also train them how to behave among their own people. The National Security Forces trained by Dayton are not authorized to make arrests, but they regularly lead joint operations with Palestinian security services whose senior leaders have been trained by the USSC, and that have, according to Human Rights Watch and Palestinian human rights groups, practiced torture. A year into Fayyad’s first term, Mamdouh al-Aker, then head of the PA’s human rights organization, spoke of the government’s “militarization” and asserted that “a state of lawlessness had shifted to a sort of a security state, a police state.

Charges of authoritarianism have intensified since. Abbas, whose term expired during the war in Gaza, has been ruling by presidential decree. There has been no legislature since June 2007, and judicial rulings are frequently ignored by the security services. Fayyad, for all his commitment to accountability and transparency, has repeatedly been found in polls to have less legitimacy than the Hamas prime minister in Gaza, Ismail Haniyeh, and oversees a government that in a recent Global Integrity Index tied with Iraq as the sixth most corrupt in the world.

In other respects, too, the PA’s practices have come under severe criticism. According to Sha’wan Jabarin, the director of the Palestinian human rights group al-Haq, torture has in recent months again become routine. In polls taken since Fayyad took office, West Bank residents have consistently reported feeling less safe than Gazans, whose lives under Hamas rule are in many respects worse. The Ministry of Religious Affairs has dictated Friday sermons to be read by imams. Palestinian journalists, according to Amnesty International, were detained and threatened during the Gaza war for reporting on government suppression. The Palestinian Authority, since Fayyad became prime minister, has twice ranked lower in the Reporters Without Borders Press Freedom Index than any other Arab government. And Freedom House now gives the PA the same rating for political rights that it does for civil liberties—”not free."

Fayyad has attempted to strengthen his credibility with Palestinians by participating in acts of “peaceful resistance”—demonstrations against Israel’s security wall and burnings of products made in Israeli settlements. But Sam Bahour, a Palestinian entrepreneur and advocate of civil rights, told me that the government’s recent decision “to adopt one small element” of an existing and more comprehensive boycott is mere “window dressing” meant to cover up “a heavy-handed security state whose primary goals are to keep Hamas and criticism of the government in check.” On August 25, when leftist and independent political parties held a rally against the direct talks with Israel that began one week later, it was violently broken up by PA security forces.

Last winter and spring, the PA prepared for July municipal elections, which Hamas, citing political repression, announced it would boycott. Khalil Shikaki, the most prominent Palestinian pollster, told me that the purpose of the elections was “to further weaken Hamas and bolster the government’s legitimacy.” When Fatah’s internal divisions prevented it from agreeing on candidate lists, the PA canceled the elections, denying that it had done so because Fatah feared losing. But Sha’wan Jabarin told me that the government’s denial was not credible:

In May and June, we learned of tens or hundreds of cases where Hamas followers were questioned by the security forces about the municipal elections and asked if they want to run or not, if they want to vote or not, to whom they want to give their vote.

At his office in Ramallah, Shikaki said that because people in Gaza feel freer to express their political views to his staff, “We get more accurate reporting on how people voted in the last election in Gaza than we do here.”

In his report circulated among senior White House and military staff earlier this year, Colonel Dermer wrote, “While Israelis and [US] officials view recent PA successes in the field rather myopically as a win against terror, wary Palestinians view them as new [PA] regime protection.” A shortcoming of US efforts, he believes, “is the undefined nature of the USSC mission and its desired end state. Is the aim for the PA to take on and defeat Hamas militarily? To seek vengeance for the loss of Gaza? To maintain order on Israel’s behalf? Or is it to lay the security groundwork for a free and independent democratic Palestinian state?” Ghandi Amin, a director at the Independent Commission for Human Rights, a PA ombudsman, told me, “I have no hope for the Fayyad plan. I look on the ground and see only an increased role for security agencies.”

In October, Dayton will retire and be replaced by a three-star Air Force general, Michael Moeller. During the next year, Moeller is scheduled to receive the USSC’s largest ever appropriation. His task, as the deadlines for both the Fayyad plan and the end of Israeli–Palestinian negotiations approach, will be to advance two irreconcilable goals: building a Palestinian force that can guarantee Israeli security while also lessening the perception that the US is firmly supporting what many residents of the West Bank, like the independent politician Mustafa Barghouti, have come to describe not as one occupation but two.