After iftar, the fast-breaking meal of the Muslim fasting month, Palestinians in downtown Ramallah take late night strolls on streets lined on both sides with bright Ramadan lanterns.Despite the seemingly festive mood, residents of the de facto capital of the Palestinian Authority say they are deeply skeptical of the prospects of the new American initiative to restart peace talks with Israel.On July 19, United States Secretary of State John Kerry announced from the Jordanian capital Amman that Israelis and Palestinians had established the groundwork to resume direct peace talks, stalled since 2010. Contending that the agreement was still tentative and required more work, Kerry said that if everything goes according to plan, Palestinian and Israeli negotiators would soon travel to Washington for their first meeting.But Palestinians, disappointed by over 20 years of previous negotiations that failed to deliver them a state, doubt that this time around will be any different.“Talks failed to deliver on their promises back when expectations were much higher,” Salam Shehade, 58, handing change back to a customer at his sweets shop, tells The Jerusalem Report. “Now, there’s hardly any reason to be optimistic.” According to a June survey conducted by the Palestinian Center for Policy and Survey Research (PCPSR), 69 percent of Palestinians believe that the two-state solution will not be possible in the next five years. Palestinian officials said it was premature to say direct negotiations had resumed.“Many issues still need to be resolved,” Wasel Abu Yousef, a member of the Palestine Liberation Organization executive committee, tells The Report. “Without a clear political reference, a stop to settlement expansion and the release of prisoners, we will not return to negotiations.”Palestinian Authority (PA) President Mahmoud Abbas say the talks must be about establishing a future state in the West Bank, the Gaza Strip and East Jerusalem, and based on the borders that existed before Israel captured the West Bank in the 1967 Six Day War. They also demand that Israel freeze settlement building in the West Bank and release long-serving Palestinian prisoners from Israeli jails.Prime Minister Benjamin Netanyahu, who has shown willingness to release some prisoners as a “confidence-building measure,” says Palestinians must return to talks without preconditions, and the 1967 lines would leave the Jewish state “indefensible.”The Arab League already endorsed Kerry’s bid to restart the peace talks, and confirmed that it was willing to accept swapping land on either side of the 1967 border, which would allow Israel to keep large settlements blocs in the West Bank that it said it would keep under any peace deal with the Palestinians.But political squabbles within the Palestinian Authority (PA), ongoing rivalry with the Islamist group Hamas, and a shaky economy are not providing a firm launch pad for negotiations.Hamas, which rules the Gaza Strip, opposes Abbas’s peace strategy and dismissed Kerry’s efforts as futile.Just 18 days after taking office, Prime Minister Rami Hamdallah abruptly offered his resignation on June 20 to President Mahmoud Abbas, signaling continued internal political uncertainty. Hamdallah’s predecessor, Salam Fayyad, an internationally respected economist, resigned on April 13 after six years in office. Under Palestinian law, a replacement for Hamdallah must be named within a maximum of five weeks. However, since Abbas is in charge of relations with Israel, the political scuffle over who will head the next government is not expected to have an impact on the efforts to revive the peace talks.Bir Zeit University Professor George Giacaman says Abbas might take the post himself or may appoint one of the deputies. But he is currently busy with more pressing issues.“For Abbas, peace talks are the priority at the moment,” Giacaman tells The Report, “because the very status of the Palestinian Authority is based on the status of the peace talks.”Under interim peace deals signed with Israel, the PA was set up in 1993 to exercise limited self-rule over parts of the West Bank, ahead of the establishment of an independent Palestinian state. But two decades later, with no state in sight, and national elections already four years overdue, Giacaman says Palestinians have not only grown increasingly disenchanted with their aged leaders, they are also questioning their entire purpose. “The legitimacy of the PA is in trouble. It cannot afford to waste another 20 years on peace talks,” Giacaman says.According to the PCPSR survey, 47 percent of Palestinians in the West Bank believe that their leadership is a failure and 41 percent believe that the PA should be disbanded.Political analyst Hani al Masri says Palestinians are increasingly cynical about their leaders’’ ability to negotiate with Israel, and view the PA as inherently weak and lacking in real political sovereignty, as it ultimately operates under Israeli control.“This is a Palestinian Authority with no authority. All the real powers are with Israel,” al Masri tells The Report. “The Palestinians only govern over the leftovers.”In an attempt to build trust and provide an incentive to make peace, Kerry, in May, introduced an economic component to his political bid that would see some $4 billion invested in the West Bank. The aim of the scheme, overseen by former British Prime Minister Tony Blair, is to improve the struggling Palestinian economy, boost its gross domestic product, and reduce unemployment and poverty.Kerry said the “transformative” plan could increase Palestinian GDP by as much as 50 percent over three years, raise average wages by some 40 percent, and reduce unemployment from 21 percent to 8 percent. The plan also aims to lower Palestinian dependence on donor aid. Currently, some 40 percent of the PA budget is supplied by foreign funds.But Kerry did not identify which companies would invest, or how he hoped to ease Israeli obstacles on Palestinian movement or commerce, drawing skepticism from Palestinian economic experts.According to Palestinian economist Nasser Abdel Karim, given the relatively small amount of investment that Kerry is proposing, it is completely unrealistic that the Kerry plan could bring about drastic change. “The billions of dollars of investment and aid that have been pumped into the Palestinian economy over the past seven years did not have any major impact on the economy,” Abdel Karim explains to The Report. “Why would this small amount spread out over several years suddenly make this major improvement?” The West Bank economy has been suffering from a worsening crisis for over two years, caused by cuts in Western donor funds and temporary Israeli freezes on money transfers. The previous Palestinian government struggled for months to pay its tens of thousands of public sector employees on time and in full.The International Monetary Fund said in early July that Palestinian economic growth was expected to slump to about 4.25 percent this year, down from about 9 percent in 2010.Kerry said that the proposed economic plan was not a substitute for a political solution, but acknowledged that it would not fully materialize without movement toward peace between Israel and the Palestinians.Abdel Karim says Kerry is aiming to make peace “worth it” to the Palestinians. Ultimately, however, all the plan would accomplish, if it materializes, is to “buy time” instead of exert pressure on Israel to ease its control of the Palestinian economy.“Anyone who knows anything about the Palestinian economy knows that it cannot grow in a consistent manner given the political reality.