RAMALLAH, West Bank, June 29 (Douglas Hamilton, Reuters) - Prime Minister Salam Fayyad is shaking things up with a Yes-We-Can message to Palestinians, urging them to get on with building their state, in spite of the Israeli occupation and in order to end it.

We need to stir things up, he said in a weekend interview with Reuters at his Ramallah offices. What I'm proposing is a new way of getting things done. Let's begin to create positive facts on the ground and use them to create progress.

A bit of rocking the boat is not wrong at all, said Fayyad, adding that after all, no one on the Palestinian side can claim 'Hey guys, we're coasting to victory here.'

The 57-year-old former World Bank economist has no political power base of his own but enjoys Western backing and popularity at a time when Palestinians are divided in the face of Israeli Prime Minister Benjamin Netanyahu, who offers them a deal falling well short of full statehood in return for peace.

Fayyad says the Israeli occupation might make some big projects impossible for Palestinians now, but they should be getting on with everything they can in those places where Israel cannot obstruct, in order to advance their vision of statehood.

Fayyad's government has made progress in key areas. Public finance, once in chaos, is now up to international standards, he said. There had also been a major turnaround in security which looked like Mission Impossible a few years ago.

But progress was uneven and insufficient. Judiciary standards had to be raised and service delivery improved in health, education and welfare, along with tax-collection.

Palestinians must adjust to the reality on the ground and be clear that being unable to mount big projects because of Israeli occupation did not mean they can do nothing.

Sharp-witted and articulate, he is nevertheless viewed with suspicion, even resentment, by stalwarts of the dominant Fatah movement of President Mahmoud Abbas. He is rejected as a Western puppet by Hamas Islamists who rule 1.5 million Palestinians cut off from the West Bank under Israeli blockade in the Gaza Strip.
But Fayyad brushes these unwelcome details aside.

THE FAYYAD CHALLENGE
Palestinians must sideline their political differences, he says, and unite to build their state over the next two years, so its institutions are up to world standards by 2011, proving a state-in-readiness exists, whatever Israel is saying by then.

My ultimate ambition is that when this task is done, people will look at us from whichever corner of the world, from China to Brazil, and they'll say: 'The Palestinians do have a state'.

Countering defeatism is one of the best things he could deliver, he says. His vision is about lifting the spirit of our people and getting them to believe that indeed we can do things, instead of complete helplessness.
When Fayyad presented his vision in a speech at Al Quds University in the West Bank this month, he was criticised by some in the Fatah mainstream for presumption, and vagueness.

What did he mean by a two-year deadline, commentators asked. Who was he to set out national aims? Was he trying to usurp the Palestine Liberation Organisation and Fatah?

One newspaper headlined The Fayyad Promise, he recounted. But it's not a promise, he told Reuters. I'm not in a position to promise anything. It's a challenge to ourselves.

And what is a plan without a timeline? he said. It's nothing. No timeline means we risk being seen as accepting an indefinite 'interim period', he said, referring to milestones foreseen by the Oslo accords of the early 1990s on the road to a peace treaty and establishment of a Palestinian state.

We are 10 years already past the presumed end of the 'interim period', which should have ended in May 1999, according to Oslo, he noted. I think 2 years is a reasonable timeline.

(Additional reporting by Adam Entous and Mohammed Assadi; Editing by Samia Nakhoul)