Alexander Hamilton of Palestine?

“An economist who curbed Yasser Arafat's freewheeling spending of public funds and earned the trust of the Bush administration is now the Palestinians' best hope for persuading the West to end an international boycott of their government.

Salam Fayyad, a former finance minister, is to return to the post in an emerging coalition between the Islamic militant Hamas and the Fatah movement of moderate Palestinian President Mahmoud Abbas. He also is being considered for a second job, as deputy prime minister, to boost the new government's appeal….

Fayyad, a U.S.-educated former International Monetary Fund executive, said he is eager to take on the new job, despite warnings from U.S. and Israeli officials that even he would be shunned if he joins a government that does not meet the West's demands.

"I have nothing but to try and to work hard to lift the sanctions," Fayyad, who looks like a banker in elegant suits and ties, said in an interview in his office in Ramallah.

Fayyad, who spent 15 years in the U.S. and first entered Palestinian politics in 2002 with his appointment as Arafat's finance minister, is widely seen as a determined reformer.

However, some critics say Fayyad did too little to go after those who stole public funds in the Arafat era.

"Salam Fayyad consolidated all Palestinian governmental investments, but he did not tell us about the history of these investments," said Nasser Abdelkarimm, an economist at Bir Zeit University.

Fayyad says he was focused on making improvements at the Palestinian Treasury at the time, and hoped the guilty would eventually be put on trial.

Fayyad is worried that the yearlong international boycott is destroying his main achievement - a single Treasury account that unified Palestinian public finances.

Despite the boycott against the government, foreign aid keeps coming. Last year, it even went up, from $1 billion in 2005 to more than $1.2 billion in 2006. But the funds are no longer being sent to a single address, the Finance Ministry.

Instead, the money now goes either to Abbas' office or directly to civil servants and welfare recipients, bypassing the government. The Hamas-run Finance Ministry handles local revenues, and Cabinet minister have carried $68 million in cash across the Egypt-Gaza border because banks refuse to handle the government's money transfers.

Fayyad said he is determined to restore the single account and end some of the more dubious practices, such as Hamas' cross-border cash runs. "I will not allow having different channels of revenues and expenditures," he said. "I will not allow anyone to sabotage the modern system we built."

Fayyad was born in the northern West Bank village of Deir Al-Ghassoun. He holds an M.A. in accounting and a doctorate in economics from the University of Texas at Austin. He taught at Yarmouk University in Jordan before joining the IMF.

He worked briefly for the Arab Bank before being named finance minister by Arafat in 2002. Unlike other government officials of that era, he did not live lavishly. He drives a second hand Mercedes, moving around with bodyguards after shots were fired at this office earlier this year.

After leaving the Treasury last year, he set up an economic think tank. He also founded a small party, "The Third Way," and won a parliament seat in the January 2006 election that swept Hamas to power.

Even when not in power, Fayyad is routinely sought out by visiting U.S. and European leaders, including Secretary of State Condoleezza Rice. Such meetings can be problematic in a region where anti-U.S. sentiment runs high over America's perceived pro-Israel bias.

Fayyad defended his close ties, saying "the relationship with the West is a Palestinian interest first."

He also told a recent academic conference in Israel that he is committed to a "warm peace with Israel" and would seek strong economic ties between Israel and an independent Palestine….

"I think he will establish credibility for that position (of finance minister)," said George Al-Abed, head of the Palestinian Monetary Authority. "But at the same time, we should not expect miracles.”

- Economist Key in Hamas-Fatah Coalition