The Israeli-Palestinian conflict is to the wider Middle East what off-Broadway is to Broadway. It is where all good and bad ideas get tested out first. Well, the Palestinian prime minister, Salam Fayyad, a former I.M.F. economist, is testing out the most exciting new idea in Arab governance ever. I call it “Fayyadism.” Fayyadism is based on the simple but all-too-rare notion that an Arab leader’s legitimacy should be based not on slogans or rejectionism or personality cults or security services, but on delivering transparent, accountable administration and services. Fayyad, a former finance minister who became prime minister after Hamas seized power in Gaza in June 2007, is unlike any Arab leader today. He is an ardent Palestinian nationalist, but his whole strategy is to say: the more we build our state with quality institutions — finance, police, social services — the sooner we will secure our right to independence. I see this as a challenge to “Arafatism,” which focused on Palestinian rights first, state institutions later, if ever, and produced neither. Things are truly getting better in the West Bank, thanks to a combination of Fayyadism, improved Palestinian security and a lifting of checkpoints by Israel. In all of 2008, about 1,200 new companies registered for licenses here. In the first six months of this year, almost 900 have registered. According to the I.M.F., the West Bank economy should grow by 7 percent this year.