A President threatening to quit, his potential successor languishing in an Israeli jail and a peace process heading nowhere: rarely have prospects for the Palestinian people looked so bleak.

Five years after Yassir Arafat died, his defiant portrait stares down from banners in the streets of Ramallah. While he remains a potent symbol of Palestinian resistance, his successors are characterised more by despair than defiance.

Mahmoud Abbas — popularly known as Abu Mazen — is so frustrated by the stalled peace process that he is refusing to stand for re-election. With no obvious successor, his imminent retirement threatens to unravel the entire Palestinian leadership. There is even talk of the movement being hijacked by the militants who regard talking to Israel as a waste of time.

Mr Abbas cannot resign until after January, the scheduled date of elections, because under the Palestinian constitution he would have to be replaced by the Speaker of parliament. Since Hamas won the last parliamentary elections in 2006, that would mean a Hamas president, giving the Islamists control of the entire Palestinian territory.

Hamas has said that it will boycott the elections, arguing that Mr Abbas’s mandate expired a year ago. He decreed at that time that he would stay on until presidential elections could be held alongside parliamentary polls. Such constitutional gymnastics are likely to continue in the near future, with Hamas and Fatah claiming they are the rightful Government in the probable absence of polls in both Palestinian areas.

A more radical scenario, which some Palestinian officials have raised, envisages Mr Abbas, 74, dissolving the Palestinian Authority, created under the now-defunct Oslo peace accords, and continuing to rule in his capacity as the head of the Palestine Liberation Organisation. Many Palestinian opposition figures have argued that the Authority is a “Vichy government”, legitimising continued Israeli occupation.

The Palestinian leadership finds itself in this quandary because the peace process has run into the sands. President Obama’s efforts to restart talks are stalled by Israel’s refusal to freeze all Jewish settlement growth in the West Bank, and the Palestinians’ insistence that they will not negotiate until settlement building stops.

“Israel always said Arafat wasn’t a partner for peace,” said Rabiha Diab, the Palestinian Minister for Women’s Affairs and a long-time member of Arafat’s Fatah movement. “We see now the Israelis are not partners for peace, they have implemented nothing and the world stands by them.”

Many Palestinians believe that the Israelis poisoned Arafat, who lived out his final years practically under house arrest in Ramallah, and have now crippled his successor by not responding to his peace overtures and renunciation of violence. “Israel killed President Arafat, and now it is trying to kill Abu Mazen’s project at a time that it knows he is committed to bringing peace,” said Mrs Diab.

Mr Abbas’s announcement last week that he would not stand for reelection left observers guessing about his real intentions. Tony Blair, the international community’s envoy to the Middle East, said yesterday that Mr Abbas’s decision to step down was not a political ploy but a reflection of his deep frustration at the absence of any meaningful peace process.

Abdel Nasser al-Najjar, the editor of the Fatah-linked newspaper al-Ayyam, said he thought Mr Abbas was serious about stepping down, though possibly not as soon as January. “There’s nobody at this point who can replace the President,” he said. Given the deep divide between the Hamas-run Gaza Strip and Fatah-led West Bank, he said Mr Abbas would probably delay the elections until June, by which time he might have wrung some concessions out of Israel, under pressure from the US, or have reconciled with the Gaza Islamists.

Mr al-Najjar said that if elections were held now without Mr Abbas, the Palestinians would probably choose a more militant candidate. “Abu Mazen represents moderation, in spite of all the criticism against him,” he said. “The option of negotiations goes out with Abu Mazen, so the people would elect someone else who offers another option,” he warned. The most popular contender to succeed him is Marwan Barghouti, a younger Fatah leader who played a key role in the second Palestinian intifada, which started in 2000. However, he is in an Israeli jail after being convicted of heading a group that killed Israeli civilians.

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