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Palestinian President Mahmoud Abbas got rid of the closest thing the Palestinian Authority had to an indispensable man: Prime Minister Salam Fayyad.

No one has done more to stabilize the Palestinian economy, build the institutions for a state, bring integrity and reform to the Palestinian government, win the confidence of the Western donor nations and earn Israeli praise for security cooperation. All that is now in danger.

Fayyad gave Palestinians a unique form of Arab government, one “based on competence, not on a legacy of [armed] resistance or on religion,” Khalil Shikaki, director of the Palestinian Center for Policy and Survey Research, told the New York Times. He dubbed it “Fayyadism” and called it “a new source of legitimacy.”

But it was apparently too much for the old guard of Abbas and his Fatah party. Fayyad “invited envy and resentment” from them, making him “a political rival who must be cut down to size,” said Hassan Barari, a Jordanian scholar at the Washington Institute for Near East Policy.

Fayyad, 61, a U.S.-educated former World Bank economist, was that rarity in the least likely of places, an honest politician who fought cronyism and corruption the PA inherited from Yasser Arafat.

Secretary of State John Kerry unsuccessfully tried to prevent the resignation, but the relationship between the two Palestinian leaders had deteriorated too far. In fact, Kerry’s calls may have backfired by creating resentment over American intervention in internal matters.

Their relationship steadily deteriorated as Abbas became increasingly autocratic while Fayyad pressed for greater financial and political reform.

Many in Fatah’s leadership welcomed Fayyad’s exit; they considered him too independent, too close to Washington, too popular abroad, too unsympathetic to their demands for patronage jobs and other spoils, and he wasn’t a party member.

Fayyad strongly opposed Abbas’ unilateral bid for U.N. membership in the face of strong American and Israeli opposition, warning it would carry heavy financial consequences. And when he was proven right, some in the Fatah leadership blamed him for the resulting cutoff of funding and an inability to pay government salaries.

“Fayyad was subjected to an increasingly vituperative campaign of public vilification,” said the American Task Force for Palestine.

Fayyad also felt Hamas-Fatah reconciliation was a major mistake because it would create an even greater financial crisis and also was unworkable. He warned such a deal would dry up Western funding and end any chance of restarting peace talks with Israel because neither Washington nor Israel would deal with a government that included Hamas, which they consider a terror organization whose avowed goal is the destruction of the Jewish state. And security cooperation would halt, opening the way for renewed conflict.

Abdul Rahman al Rashed, the head of Al Arabiya television,

said, “Fayyad is the one person who gave the Palestinian government a good reputation.”

An unnamed “senior Western diplomat” told Reuters, “I do not think Fatah understands that Fayyad is the only Palestinian politician who has the support of a broad spectrum of international donors. The wheels could come off aid deals very quickly with him out of the government.”

Fayyad’s departure is also a great loss for Israel. He reformed and restructured the PA security establishment into a professional force that made the West Bank and Israel safer and established effective coordination with Israeli authorities.

But it is also true that the disinterest shown by the Israeli government in renewed negotiations and expansion of settlements badly undercut the one Palestinian leader it claimed to support.

Fayyad has been called the go-to man for Israel’s military and political leaders as well as for the United States, the Europeans and the donor nations. They may be reluctant to pour more money into the PA until they are convinced the new leadership will be as reliable and committed to transparency and responsible governance as Fayyad. Further deterioration of Palestinian economic conditions could lead to political unrest, and if it turns violent it could spill over into Israel with a possible third intifada.

Just last week Kerry met with Prime Minister Benjamin Netanyahu and Palestinian leaders and they agreed to focus on West Bank economic development as a path back to peace negotiations. Fayyad’s resignation could prove a serious setback for that initiative, but with neither Netanyahu nor Abbas showing any real interest in returning to the table, the greatest immediate concern in Israel about Fayyad’s departure is continued close security cooperation.

Fayyad has agreed to remain on as head of a caretaker government until a replacement is named. That could range from next week to no-one-knows-when. Meanwhile, Abbas will have time to consider whether accepting his rival’s resignation was the right thing to do.

Douglas M. Bloomfield is the president of Bloomfield Associates Inc., a Washington, D.C., lobbying and consulting firm. He spent nine years as the legislative director and chief lobbyist for AIPAC.