Organized calls for reform in the Palestinian political system date back to 1997, when a PLC committee issued an exceedingly critical report on corruption and mismanagement among Arafat's closest PA associates. The current intifada, triggered in September 2000, in part by young reformers, unleashed sociopolitical changes that led the young guard, and their supporters in the refugee camps and poor urban areas, to become weary of corruption and paralysis of the PA and its lack of popular legitimacy.
A large section of the middle class also came to share these frustrations. The largest campaign for reform, spurred by the dismal performance of PA institutions during the Israeli reoccupation of West Bank cities in March-April 2002, forced Arafat to agree, albeit reluctantly, to some changes. Soon after the incursion, he signed the Basic Law (which the PLC had passed in 1997), approved the unification of national finances under an account controlled by a new finance minister, and set a date for national elections.
The Bush administration's June 2002 announcement of its policy of Palestinian regime change and the Israeli siege against Arafat a few months later tarnished the reform agenda by associating it with Israeli and American demands. The external political and military pressure emboldened Arafat and his allies and dampened calls for reform, since no patriotic young guard reformer wanted to be linked to Bush and Sharon. (emphasis mine)
That last bit is key. The attempts by the U.S. and Israel to isolate Arafat have been disastrous on every count. They have weakened moderates, increased Arafat's popularity (which had been seriously flagging), and greatly emboldened Islamist groups such as Hamas and the Al Aqsa Martyrs Brigade.
I find it incredible that Sharon could have imagined any other result.
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