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The Ramallah miracle: Is Palestine ready for independence? Add to ...

Hostages to fortune

But there is no guarantee that the good life will continue. It's fragile and depends entirely on Israel, which continues to occupy much of the West Bank to control its borders. It could easily be snuffed out if Israel stops co-operating or international donors turn off the aid tap before a real economy is established.

"Most of the economic growth has come because of the large amount of international assistance," Mr. Barghouthi said.

"The money is mostly going to prop up the PA," he said, referring to the Palestinian Authority of Mahmoud Abbas. "It pays the salary of 171,000 civil servants."

However, the effect of that has been to encourage banks to invest in the West Bank in a big way, Mr. Barghouthi explained. "The banks invested $3-billion in the West Bank in 2010," he said. "That's huge. It equals about 70 per cent of the GNP."

Most of the money went into loans for real estate and construction, not into industry or agriculture, so it's not the most stable foundation.

If there's a political change - renewed conflict with the Israelis, or even Hamas reconciling with the ruling Fatah party - "money could dry up in a hurry," Mr. Barghouthi explained.

"Even if we don't have a major political crisis, we still operate at the whim of the Israelis."

At any time, Israel could set up checkpoints to impede movement, or bar Palestinian goods from entering or leaving the territory.

Mr. Barghouthi pointed to the remarkable development of Rawabi, a new Palestinian city for 40,000 people being built from scratch (not unlike an Israeli settlement) 20 kilometres north of Ramallah.

The hilltop land is being groomed, the investors are lined up, but construction of the attractive multifamily dwellings cannot start because of Israeli reluctance to approve a road that would cross a small stretch of land that is currently part of a buffer around two nearby Israeli settlements.

The land, confiscated from Palestinians by the Israeli occupation, is designated as part of what is known as Area C - territory under strict Israeli control. Despite previous agreements, the Israeli government is holding things up, apparently because of complaints from settlers who say they need the land to expand.

Still, the Palestinian developers are confident that the building will be allowed, and work continues to prepare the ground.

Endgame

When Israeli Prime Minister Benjamin Netanyahu came to power two years ago, he said he had little interest in resuming a formal peace process with the Palestinians, but preferred to see the improvement of business and living standards in the West Bank. Such improvement, he reasoned, would make a transition to co-existence between Israelis and Palestinians easier.

(His followers believe that "co-existence" wouldn't necessarily mean the establishment of a completely independent Palestinian state.)

Despite the criticism levelled against him for expanding settlements that eat into West Bank territory, Mr. Netanyahu has been true to his word. New Israeli policies have lifted many of the checkpoints that made travel in the West Bank difficult, and have made the export and import of materials easier. Urban areas now fall under almost complete Palestinian control.

All of this has increased confidence and optimism, contributing to this new economic growth.

But it took more than that to create this boom economy. It also took a fundamental change in Palestinian outlook, a break from the self-destructive approaches of the past.

"The people have realized that economic and social deterioration do not serve the Palestinian cause," Mr. Aweidah said. "If you want to keep people here, you have to make them a better life.

"More than 150,000 Palestinians left the West Bank during the [very violent] second intifada," Mr. Aweidah noted. "And they were the most qualified people. We don't want that to happen again.

"Fortunately," he said, "Palestinians have realized that violence won't work. Every time it happens, we suffer a setback.

"That's why Salam Fayyad is so smart," he said, referring to the Prime Minister and his decision to accept the occupation as a given and to proceed to build a state anyway.

Mr. Fayyad and Mr. Abbas are now asking the international community to recognize that such a state exists.

Half a dozen South American countries, including Brazil and Argentina, have done so, and the Palestinian leaders are taking their case to the United Nations General Assembly in September. Even Israelis now concede that a majority of UN members are likely to recognize a Palestinian state.

"If Netanyahu thought we'd forget about a state, just because the quality of life improved, he better think again," Mr. Aweidah said. "All this investment and growth will only make us more determined to govern ourselves."

Patrick Martin is The Globe and Mail's Middle East correspondent.

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