KEEN TO FOLLOW THE RULES
The President was keen to follow the rules by asking for a new government to be formed within the prescribed time despite the fact that the entire Palestinian political order is no longer legal. Abbas's mandate lapsed in 2009, while that of the Palestinian Legislative Council (PLC) ended in 2010 and the [PLO’s] Palestinian National Council (PNC) lost legitimacy as well, its members having been chosen long ago.
It is reported that most of the ministers in the outgoing cabinet will be included in the new one; in other words, the 'new' administration will be a caretaker government but without [former PM] Fayyad. This peculiar state of affairs came about because of the strained relationship between Abbas and Fayyad on the one hand, and between the ex-prime minister and Fateh on the other. It became impossible for Fayyad to continue in his position unless he agreed to become a government albeit as prime minister, unless President Abbas gave him all the powers his position is entitled to under the Palestinian political system (which was turned into a semi-presidential, semi-parliamentary system after the position of Prime Minister was invented in order to limit the influence of the late Yasser Arafat). President Abbas was thus stung by the very system he devised.
For Fayyad to continue in office became increasingly humiliating both for himself and for the Palestinian political system after the Americans began to interfere. Had he continued in his post, the political system would have appeared unable to find an alternative to him, not to mention being open to outside interference. It is important to point out that 'Fayyad-ism' is set to continue under the new government, albeit without the man himself. The new Hamdallah cabinet will continue to operate within the parameters of the  Oslo Accord and its commitments. Any change to policy will be very limited, especially as U.S. Secretary of State John Kerry was the first to congratulate Hamdallah on his appointment.
By insisting on resigning, Fayyad avoided the worsening crisis that the Palestinian political system is facing, given the obstructed peace process, the minimal prospects that peace talks may resume under not too humiliating conditions, the continuing – and worsening – split with Hamas, the momentous events taking place in the region (including the Syrian crisis and the possibility of an American-Israeli war against Iran and Hizbollah).
Fayyad can afford to wait it out until he is recalled to duty at a later date. He has already hinted that he would continue in politics and would contest the next elections (which could be held without the participation of Hamas). The formation of the new Hamdallah cabinet is therefore nothing other than a stopgap measure designed to provide a way out of the crisis between Abbas and Fayyad. It is not a solution to the serious political, economic, and social problems facing the Palestinians. Its formation is proof of the difficulties facing the establishment of a genuine government of national unity [that includes Hamas], despite the fact that its mandate does not exceed three months.
Analysts believe that the fate of the Hamdallah cabinet is linked to the success or otherwise of Kerry's efforts to kick start peace talks with Israel. Should Kerry succeed, it would be necessary to form a government that can lead the Palestinian people into a new phase and prepare for new elections – an essential requirement to provide the Palestinian political system with the legitimacy it requires to enter into serious negotiations with Israel and implement the (interim or final) agreements thereof.
Kerry's efforts may on the other hand be scuppered by Israel's intransigence and extremism. It is already apparent that the Israeli government plans to reject the 'deal of a lifetime' that Kerry is offering simply because it believes that it could get an even better one in the future. This becomes more likely if the Palestinian leadership refuses to commit 'political suicide' by agreeing to return to the negotiating table unconditionally, i.e. if it agrees to resume bilateral talks (under any moniker: direct, indirect, proximity, or exploratory) under sole U.S. supervision, whether these talks are preceded by an international conference or not.
The new government will face its biggest problem if Kerry neither fails totally nor succeeds decisively in his efforts. He would then ask for more time during which he will proceed to dismantle the Palestinian cause bit by bit, dissociating it from the land and the people. Reconciliation [with Hamas] would be put on ice, and Jordan would be given a major role in negotiations, especially after it was given the status of sole guardian of the holy places in Palestine.
In his efforts, Kerry has focused on putting in place security arrangements (overseen by U.S. Gen. John Allen) designed to reassure Israel, ensuring Palestinian and Arab compliance with the principle of land swaps, and facilitating normalization of ties between Israel and the Arab world. In fact, the process of normalization is already in full swing, if the large Israeli participation at the recent Davos economic forum held in Jordan was anything to go by. Palestinian businessmen lowered (the already low) ceiling by agreeing to an initiative that equates between victim and executioner; an initiative that makes no mention of Israel's occupation and settlements, nor of Palestinian statehood, but opens the door wide to normalization with Israel. With such an initiative, Israel does not need peace, since it gains all the privileges of peace without giving up any land.
Kerry is also pursuing his efforts to persuade the two parties to focus on borders and security and avoid the issues of Jerusalem and refugees, thus providing cover for continued settlement activities with the excuse that settling the question of borders would end the disagreement over settlements (Israel would annex the settlements lying within its borders, while the Palestinians would dismantle those lying in theirs).
The Israeli government, which has foiled all efforts to freeze settlement expansion, is perfectly capable of undermining an agreement on borders (a far more difficult proposition). Kerry knows that, which is why he has been promoting the idea of tripartite Israeli-Jordanian-Palestinian control over the Jordan Valley and laying the groundwork for a three-party confederation (which would be a confederation in name only) to pander to Israel's rejection of Palestinian statehood. Under this plan, isolated Palestinian islets in the Jordan Valley would be linked to Jordan.
A genuine confederation requires Palestinian statehood within the borders of 1967. Obviously, this has not happened yet despite the fact that the Palestinians scored an important political, moral, and legal victory by securing UN recognition. Unfortunately, the Palestinian leadership has so far failed to build on that victory, but has on the contrary cast it aside and bizarrely sought to utilize it in its quest to resume the futile and ultimately harmful 'peace process.'
The Hamdallah government is an attempt to buy time while the Palestinian leadership waits to see what will transpire with peace talks, the reconciliation process, and developments in the wider region (especially the Iranian nuclear issue). The new government could last a long time however, especially as the PA would not have to contend with a strong leader like Fayyad, who enjoyed American and European backing and had political ambitions of his own.
The Hamdallah government is effectively Abbas' government, especially if Mohammad Mustafa and Ziad Abu Amr were to be appointed deputy prime ministers. It seems that we are reverting to a presidential system.