Pursuant to the Oslo Accords, the authority of the PA Government is limited to some civil rights of the Palestinians in the West Bank Areas A and B and in the Gaza Strip, and to internal security in Area A and in Gaza. While Israel since the signing of the Oslo Accords in 1993 continued establishing and expanding settlements throughout the Palestinian territories and refused to withdraw as stipulated in the Oslo Accords, President Arafat was reluctant to transfer power, and opposition was growing from within and outside his own party, Fatah. After the collapse of the Israeli–Palestinian peace negotiations and the outbreak of the Second Intifada, in an Israeli military operation in April 2002, Israel re-occupied all West Bank areas set down for where the PA was supposed to exercise limited self-government. The Palestinian Authority infrastructure was largely destroyed and in June 2002, after further extensive destruction, President Arafat was held hostage in his Mukataa in Ramallah for the second time within a few months. In June 2002, the Israeli Government definitively approved construction of the West Bank barrier, largely built within the Palestinian territories and endangering the contiguity of the future Palestinian state.
On 16 May 2002, the Palestinian Legislative Council presented Arafat with a list of recommended changes to radically overhaul the way the Palestinian Authority operated. It demanded presidential and legislative elections within a year, and recommended that Arafat's current government resign and that Arafat appoint a smaller government within 45 days. It also called on him to sign the Basic Law. In his response, President Arafat said that no elections would be held until Israel fully withdrew from the Palestinian territories where the Oslo Accords called for full or partial control by the Palestinians. Since the establishment in 1996 of the first PA government approved by an elected PLC, there had not been rules about the term of the Government. Ministers were just appointed and dismissed by President Arafat, whose own term was the interim period of the Oslo Accords. In 1997, the PLC approved the Basic Law, which was not signed by Arafat until 29 May 2002. This 2002 Basic Law stipulated that it only applied to the interim period set by the Oslo Accords. According to the Law, the Legislative Council as well as the President of the Palestinian Authority were envisioned to function until the end of the interim period. The interim period had in fact ended on 5 July 1999.
Formation of the Cabinet
Early in June 2002, Arafat wanted to form a new, smaller Cabinet. He asked the Popular Front for the Liberation of Palestine, the Democratic Front for the Liberation of Palestine and Hamas to join the Government, but all refused. While Arafat was building a new Cabinet, the Israeli army raided Ramallah and started a new siege on Arafat's headquarters. On 11 June, the siege was strengthened, and the first meeting of the new Cabinet was cancelled.
End of the Cabinet
Members of Fatah demanded the dismissal of some Cabinet ministers seen as corrupt or incompetent. On 11 September 2002, Arafat would present a new Cabinet to Parliament for approval, but a group of Fatah lawmakers threatened to vote against the Cabinet, despite pressure by their leader. The Fatah representatives were willing to limit their vote to five new ministers only. As a compromise, Arafat issued a presidential decree for presidential and parliamentary elections in the West Bank, Gaza and Jerusalem to be held on 20 January 2003. As a consequence, the current Cabinet would only be a temporary one. Members of the Cabinet submitted their resignations and the vote on the new Cabinet that Arafat initially wanted to present was canceled. According to Palestinian Law, the PLC had to be dissolved 90 days before an election. A reshuffled temporary cabinet was approved, with the intention to remain until new elections were held. Six ministers left the Government. The Interior, the Justice and the Health Ministers were replaced with new members. The total number of Ministries was decreased by one. The Telecommunication Ministry was merged with the Transportation Ministry of Mitri Abu Eita. The Ministries of Civil Affairs and of Youth and Sports were replaced with the two new Ministries Orient House Director and Prisoners Affairs. The new elections, however, did not take place. The 2002 Cabinet functioned until the 2003 Basic Law came into force in March 2003 and the political system was changed. Also, the PLC was not dissolved.
