JENIN, West Bank - Sitting in his office beneath two signs deploring smoking, Salahaldin Mousa listens all day as his fellow citizens interrupt his paperwork to complain about their utility bills or to demand jobs. He wonders whom they may be connected to, and if they have guns.

"We live without a social contract now," he said. "We rely on our own relationships."

Across town, in the Jenin refugee camp, Zacaria Zubeidah addresses the same matters, as well as some that are more dire: theft, robbery, even murder.

Mr. Mousa and Mr. Zubeidah met in prison in 1989, as teenagers who joined in the first Palestinian uprising against Israel. In this uprising, this current intifada, now in its fourth year, they have taken very different paths: Mr. Mousa, 34, is the administrative manager of Jenin, and he disavows violence. Mr. Zubeidah, 28, is the leader of Al Aksa Martyrs Brigades, the militant group most feared by Israel.

With a masters degree in law and human rights from a Swedish university, Mr. Mousa dreams of becoming the Palestinian minister of justice. But it is Mr. Zubeidah, with his silver Smith & Wesson pistol at his hip, who administers what passes for law.

"I am the highest authority," Mr. Zubeidah said, echoing a view widely held in Jenin. A slender man with an easy smile, he sat in white tennis shoes, blue jeans and a brown T-shirt on a torn couch in a home in the camp.

For Palestinians, it is a mocking contradiction: President Bush and Prime Minister Ariel Sharon speak of a state of Palestine as almost a historical inevitability. But on the ground, after years of Israeli military raids and blockades and Palestinian political paralysis, the economy is growing more dependent on foreign donors, and institutions of statehood are crumbling.

In the West Bank and Gaza, a contest is under way between warlords and democrats, between Islamists and secular leaders, between those who would destroy Israel and those who would live beside it, between enclaves like Jenin and Gaza and the very idea of a unified national state.

The bulldozers are at work again in Jenin camp. Hundreds of homes are rising to replace those leveled when soldiers squared off with gunmen during an Israeli offensive two years ago. Out in the fields beyond the camp stands another legacy of the conflict, Israel's barrier against West Bank Palestinians.

For Israel, the barrier is a sign that after 37 years of occupying the West Bank and Gaza, it is deciding what it wants: to cut itself off from the Palestinians, to give up Gaza, to hold onto as much of the West Bank as it can, and to retrain a Jewish majority in a democratic state.

But for Palestinians, there is no such clarity; they have made no national decisions, and the mechanisms for making and enforcing any are breaking down.

For many residents of Jenin, their city of 45,000 has become an island, relying on itself rather than the Palestinian Authority.

"Over three years, Jenin turned back into a small village that must depend on itself," said its mayor, Waleed A. Mwais. "Israel destroyed all forms of authority. Everyone has their own weapon. This is the problem of Jenin: We have an absolute state of chaos."

Criticism of the aging Palestinian leadership, and even of Yasir Arafat, has reached a new pitch. But reform-minded leaders are struggling to find a way to start over, now that more than 3,200 Palestinians and almost 1,000 Israelis have died violently in a conflict that has become a way of life.

"You'd like to feel something has a connection to tomorrow," said Muhammad Horani, a Palestinian legislator from Hebron who has been trying for years for democratic change.

Private investment has all but vanished. But donors stepped in, doubling their contributions, to a billion dollars a year, an amount equal to one-third the Palestinian gross national product last year of $3.1 billion. That works out to roughly $310 a person, more aid per capita than any country has received since World War II, the World Bank says.

With the help of Arabs, Europeans and others, the Palestinian Authority continues running schools and paying salaries that support tens of thousands of families. This national dependency is obvious here. In the camp, some residents whose houses survived the raid envy those getting keys to new homes, built by the United Nations with help from the United Arab Emirates.

Like Palestinian society in general, Jenin is losing ground, but it is enduring. It is muddling through. This is a story of decay, not of sudden collapse; of the corrosion of an educated, relatively affluent society that Palestinian and Israeli officials say may still have the makings of a model democracy.

The Palestinian national dream has not died. There are still people fighting to hold life together, to pick up the garbage, light the streets and salvage a chance at better days. But for some of them, the breakdown in leadership seems complete.

After sunset here recently, Mr. Mousa went to his windswept rooftop to show off his view of the city he loves, and grieves for. He believes that Jenin has become a kind of "mini-state," but controlled by no one.

"We are running this place, we are not ruling it," he said, as he looked down on the lights of Jenin. "Just running, running, running. Because we have no choice."

Zubeidah, the Militant Leader

"I was busy solving a problem related to the construction," Mr. Zubeidah said, explaining his late arrival to a recent meeting. A resident had opened fire on the office of the United Nations agency that oversees the camp. The man was angry at the pace of construction of his new home.

Mr. Zubeidah, who is known throughout the city simply as Zacaria, said he managed to fill "about 70 percent" of the "absence of law" that he said was caused by Israeli pressure on the Palestinian Authority. Indeed, Mr. Zubeidah, who like others complained that too many Palestinians here have guns, appears to spend more time on internal matters than on Al Aksa's stated goal: resisting the Israeli occupation.

Since September 2000, 28 suicide bombings or shootings originated in Jenin - 38 percent of all such attacks, according to Israeli security officials. Since the Israeli barrier went up in the northern West Bank, however, the number has dropped. So far this year, the number is zero, though attempts continue.

In Israeli cities like Tel Aviv and Haifa, it is possible now to forget about the conflict, at least for a time. But on this side of the barrier, the conflict suffuses life. In June, Israeli forces regularly raided Jenin by night, arresting or killing young men the Army accused of being militants.

Jenin is a place where everyone seems to have lost a relative or friend to violence or prison. "Every second," said Mahmoud Ajawi, 45, when asked how often he thought of his boy, Anas, dead at 17. "No father would push his son in that direction."

Jamilah Nubani, 58, goes every evening to the Martyrs' Cemetery to mourn two sons and a son-in-law buried there. All were fighters or members of the security services. "God, we ask you for your mercy," she said, gripping one son's headstone to pull herself to her feet, before making her way to her other son's grave.

On his radio show, "The Town," Ziad Shelbak, 44, debates himself endlessly over the right mix of morale-boosting nationalist songs and love songs. As the conflict has worn on, he has begun playing more love songs, which he prefers, switching back to nationalist ones only if a Palestinian is killed locally. "If someone is killed in Nablus or Ramallah, I don't switch to national songs, unless it's a big character," he said.

Jenin is also place where, in spite of the conflict, life goes on. Along Faisal Hussein Street through the middle of town, men gather in the evenings to play cards for hours and drink glasses of sweet tea for a shekel apiece. (A shekel is worth about 22 cents.)

People with a little more money may go to the Gardens restaurant at the edge of town, to sip tea for three shekels a glass. The Gardens also has a pool, and at 10:45 one recent night, a swimmer did a back flip off the high dive.

But in a sign of the times, the Gardens has established a separate seating area for the shebab, the rowdy young men and fighters who unnerve the other guests.

By midnight, the card-players and tea drinkers return home, abandoning the dark streets to the fighters, who cruise in the stolen Israeli cars that somehow still manage to make it past the barrier and into Jenin. Gunfire rings out most nights.

About two years ago, Israel began forbidding the Palestinian police here and in other West Bank cities to carry guns. The police and other security men were firing on Israelis, they said. Now, in tidy blue uniforms, policemen cluster on the sidewalks during the day, but they do nothing to enforce the law, residents and city officials said.

The lack of enforcement ripples through the society. At the Jenin driving school, Abdul Karim Jarrar, 40, cannot pay his modest electricity bill. The police do not enforce traffic laws, so few new drivers bother to get licenses or instruction, he said.

Yassin Abu Saryeh, 32, a city employee who tries to collect fees for utilities, said he understood that Mr. Jarrar could not pay. But he said he also understood that Nidal Jaradat simply would not.

"You're not going to pay?" he asked on a recent visit to Mr. Jaradat's sundries store. He said that Mr. Jaradat, 40, had three years' worth of accumulated bills, amounting to thousands of shekels.

Standing behind racks jammed with candy, Mr. Jaradat argued that since his brother, a militant, was in an Israeli prison, he should not have to pay. The city owes millions of dollars for electricity and water supplied by Israeli companies. The mayor says that without a new infusion of foreign aid, the municipality will shut its doors later this year. Already, it has had to stop repaving the Palestinian-American Friendship Road, a rutted track around the city. Bill-collection rates are running at about 15 percent, and collections agents have been threatened and even attacked.

Mr. Jaradat said that if Mr. Abu Saryeh pressed the matter, he would go to the municipality to explain.

"If they don't listen to me, I'll bring some people along," Mr. Jaradat added. "My brother is well known." He added hastily to a reporter that while some people might make threats, he was not doing so.

During the Israeli incursion into the Jenin camp, Israeli bulldozers flattened Jamal Nashrati's home. He escaped with his family to his brother's house, where, as the fighting continued for days, they were forced finally to drink water from the toilet, he said.

Mr. Nashrati, 47, spent his own money to dig a cistern beneath a courtyard in his new house, built by the United Nations. Above it, he set a fountain clad in blue tile, a safe place for his children to play. Behind the fountain, in the wall, he installed an enlarged version of his United Nations refugee card, certifying that his family was dispossessed in the Israeli-Arab war of 1948.

He wants the fountain to help his children "forget what happened" two years ago and "live a normal life." He put up the display, he said, "because I want my children to keep in their memory that we come from a village called Zaharin."

Asked if he expected to return to his old village, Zaharin, in what is now Israel, Mr. Nashrati said: "This is impossible. I know that."

While Mr. Nashrati, who once worked as a welder in Israel, spoke of peace and a two-state solution, his children, maturing in this time of violence and separation, sounded a harsher note. Rukon, 10 years old, said he wanted to grow up to be a fighter like Mahmoud Tawalbe, an Islamic Jihad leader killed in the raid two years ago.

"I'm disturbed when I hear my son say that," Mr. Nashrati said. "This is a general problem for us, that we don't feel we can control our children."

Asked if he thought he could be friends with an Israeli boy his age, Rukon drew a hand across his throat. "I want only to stab him," he said.

Mr. Nashrati hastily said Rukon was young and ignorant. "This son is old enough to understand," he said, indicating Munir, 20.

Asked if he could be friends with an Israeli his age, Munir Nashrati said, "It's impossible."

Asked whom he admired among Palestinian leaders, he replied, "Zacaria.''

Arafat, the Absent Leader When Israel briefly lifted its siege on Mr. Arafat's compound in Ramallah more than two years ago, the Palestinian leader paid a visit to Jenin. But for fear of hecklers or even assailants, Mr. Arafat did not stop in the wrecked camp. Hundreds of residents clustered before a podium set up by a giant portrait of Mr. Arafat, but his motorcade whisked by behind them. Someone cut down the portrait, while a young man in a baseball cap muttered, "He didn't want to get his shoes dusty."

Now, Mr. Arafat's face still beams down from the wall of every public office, but Palestinians here freely criticize him.

"He doesn't care," Zacaria Zubeidah said of the leader of his faction, Fatah.

Of Mr. Arafat's leadership generally, he said, "For me, the one sitting in Ramallah, in his villa, in his air-conditioned room while we suffer in the heat - he's closing his windows so he doesn't hear the noise of the tanks we hear."

Last year, Mr. Zubeidah and his gunmen kidnapped Jenin's governor, a Fatah member appointed by Mr. Arafat, and held him for several hours. Released after pleas from Mr. Arafat, the man fled to Jordan.

"He was making a lot of mistakes," Mr. Zubeidah said of the governor. "We kept waiting for two years for the Palestinian leadership to do something. They did nothing."

Both Mr. Zubeidah and Mr. Mousa, the city manager, grew up in Mr. Arafat's Fatah movement, the mainstream secular faction that embraced the Oslo peace process and dominates the Palestinian Authority. Their diverging paths illustrate the ideological confusion that has upended Fatah and sown chaos in the West Bank and Gaza. It is a confusion fed by the turmoil of Palestinian politics and the social and class divides in cities like this one.

While Mr. Zubeidah speaks of achievements from this uprising, Mr. Mousa rolls his eyes at claims about the intifada made by other Palestinians he calls "the heroes of the satellite channels."

"I will never worship any leadership again," he said.

Mousa, the Optimistic Leader

Like Mr. Zubeidah, Mr. Mousa has credentials as a fighter. He spent seven years in Israeli prisons for beating a settler during the first intifada. He was released at the outset of the Oslo peace process.

The Israeli judge who sentenced him asked what he would have done with his life had he not found himself facing prison. The whole courtroom burst into laughter, he recalled, when he replied that he dreamed of being a lawyer.

"I kept dreaming about this," he said, "and now I am a lawyer."

While Mr. Mousa seized on the possibilities of Oslo, Mr. Zubeidah was shaped by its failure. Sentenced to more than four years in the first uprising, he was also released in the mid-1990's.

In prison, he said, other Palestinians taught him the primacy of armed struggle. But once released, he "faced a new reality." With an Israeli woman, his mother began staging plays here about Palestinian suffering and the hope of peace. For Israeli visitors, Mr. Zubeidah would translate from Arabic into the fluent Hebrew he learned in prison.

But after the uprising began he, unlike Mr. Mousa, again felt the pull of armed struggle.

Fatah members initially led the fighting in the second intifada. It was not until five months after the conflict began that Hamas conducted its first suicide bombing of the uprising. In the view of some Palestinian politicians, that early leadership by Fatah legitimized Hamas violence for the Palestinian public.

As Hamas then began to gain popularity, Fatah found itself competing to conduct sensational attacks. The very name of the Fatah militia - Al Aksa Martyrs Brigade - reflects what some Palestinian officials lament is an Islamicization of the faction, as it tried to top Hamas.

In January 2002, as Israel struck back and the conflict intensified, Al Aksa Martyrs Brigade added suicide to its arsenal.

Hamas vs. Al Aksa

Hamas is officially bent on Israel's destruction, while Mr. Arafat has endorsed a two-state solution. Many Fatah leaders believe Fatah should confine its attacks to Israeli soldiers and settlers in the territory that Israel occupied in the 1967 war.

But Al Aksa Martyrs Brigade began attacking Israeli civilians outside the West Bank and Gaza, persuading Israelis that Fatah had the same goal as Hamas and confusing Palestinians about what the faction stood for.

Mr. Zubeidah says he opposes killing civilians and seeks a state in the West Bank and Gaza, with its capital in Jerusalem. But, referring to the so-called Green Line between Israel and the West Bank, he asked, "Why is the '67 line something I should respect, while they don't?"

Many if not most Al Aksa gunmen, like Hamas members, emerged from the refugee camps. Nurturing a desire to return to homes in what is now Israel, residents of camps like Jenin's remained apart from city life, not even taking part in municipal elections.

The camps bred militancy against Israel, giving Al Aksa Martyrs its hard edge. They also bred a sense of grievance against Palestinians living in the cities, who were seen as soft and rich, and prejudiced against refugees. That has fueled some violence and extortion by the group against city residents.

This reporter first interviewed Mr. Zubeidah in the fall of 2001, when he was a low-ranking gunman walking through Jenin's market. Mr. Zubeidah had just been wounded when a bomb he was preparing blew up in his face, scorching it black. He rejected any talk of peace. "I lost my face!" he said at the time. "What did I achieve? I'm a refugee still."

Since then, Mr. Zubeidah has lost his mother, killed in an Israeli raid, and a brother, killed fighting in the big offensive two years ago. Almost all the young actors in his mother's theater have died. Mr. Zubeidah was promoted through the ranks quite literally by a process of elimination. His two predecessors died violently, and Israeli forces have tried to kill him; during a conversation here, he pulled up his shirt to show bullet scars in his shoulder and back.

After paying a higher price than most Palestinians, members of Al Aksa Martyrs Brigade are reluctant to lay down their weapons for anything less than the sovereignty this uprising was supposed to achieve. They may have another reason to keep fighting: Israeli security officials say some Al Aksa cells in this part of the West Bank have begun receiving money from Iran, through the Lebanese guerrilla group Hezbollah.

For a year, Fatah has been trying to rein in Mr. Zubeidah, along with other Al Aska leaders. In June, he rejected an overture by the Palestinian Authority to integrate Al Aksa into the security forces. Many Palestinian officials and analysts say it is Al Aksa, not the overall leadership, that is showing initiative. In late June, the militants issued a 10-page manifesto attacking corruption in the Palestinian Authority and demanding political change.

Yet Mr. Zubeidah, who endorsed the manifesto, said Palestinians could not hope for any effective government until the Israelis ended their occupation.

"Until we have a state, no one is going to rule us," he said. "Anyone can say he is the leader of the Palestinians. It doesn't concern me."

Kadoura Mousa, the top Fatah leader in Jenin, played down Al Aksa Martyrs Brigade as a passing phenomenon. "When occupation ends, this phenomenon will disappear," he said, "and everything will return back to Fatah."

In the meantime, he said, Mr. Zubeidah was useful as a "striking force against any person who tries to misuse power." He did not appear to find it odd that a group created to fight Israelis would be turned instead against Palestinians.

Mr. Mousa spoke while sitting by a grape arbor in his garden above Jenin, watching the sun sink beyond the barrier, behind the Carmel hills. He said the conflict had set Jenin back 20 years. But that did not matter, he continued.

"We still have people living in tents in other places," he said. "We are seeking independence and freedom, not comfortable living conditions."

Despite the high profile of Al Aksa, some local leaders say that Fatah is on its way out, and that Hamas would win any municipal election here.

The most influential Muslim prayer leader here, Khaled Suleiman, 37, said Fatah's internal contradictions were tearing it apart.

"In my opinion, Fatah is at a crossroads now," said the imam, who is not officially connected to any faction but is seen here as close to Hamas. "Its existence is based on the survival of Arafat. Without Arafat, it will be split."

Asked to describe the split, he replied: "Between Gaza and the West Bank, between village and city, between city and camp. Because it's a movement that has no political thought. It's based on the leader."

Mr. Mousa, the city manager, also believes that Fatah is at a crossroads, with two options left to reassert leadership. The first is to dissolve the Palestinian Authority and declare that Israel has left Palestinians no choice but all-out war. The second option, which he favors, is one very few Palestinians speak of.

"The Palestinian Authority should stand in front of the people and say, 'We are defeated,' " Mr. Mousa said over dinner one evening. " 'But this is not the end of the world. This is a new stage of our life.' And then you say to the world, 'Please help us.' "

After years of saving money for his own apartment, Mr. Mousa married in June - a sign, he said, of his enduring hope of a better future. He declined the offer of Palestinian fighters to supply a volley of celebratory gunfire.