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

From the top of the soon-to-be-completed Palestine Trade Tower, you can see right across Israel, past Tel Aviv to the Mediterranean Sea. It's a spectacular view and quite unexpected.

How did the Palestinians, a struggling nation under occupation, manage to build a 29-storey luxury office and hotel tower? This one, with façades of Omani and Chinese marble, a three-floor shopping mall and four levels of underground parking, looks as if it could be in Toronto or Dubai, but not in the occupied West Bank.

It's a new side of life here and tangible proof that a viable state is taking shape beyond the barbed wire and barriers that define this territory.

In the past week, reports by the World Bank, International Monetary Fund and United Nations all testify that the Palestinian Authority has begun to build the core functions of a state - particularly in areas such as health and education - and is ready for independence.

On Wednesday in Brussels, Salam Fayyad, the energized Prime Minister of the PA, presented a 63-page blueprint for a Palestinian state to a meeting of Western donor nations.

"I believe our governing institutions have now reached a high state of readiness to assume all the responsibilities that will come with full sovereignty on the entire Palestinian occupied territory," Mr. Fayyad told the countries, and then asked them for $5-billion in new investment over the next 36 months.

"The next three years will witness a transformation in the nature of external aid from 'life support' to real investment in the future of Palestine."

While the West has been fixated by the popular uprisings in the rest of the Arab world over the past few months, Mr. Fayyad and PA President Mahmoud Abbas have continued the business of building their state, cracking down on corruption, seeding infrastructure projects and hiring teachers and doctors.

Their efforts over the past two years (along with unheralded support from the government of Israeli Prime Minister Benjamin Netanyahu) are paying off. Mr. Fayyad's approach has attracted billions of dollars in new investment, lured back the Palestinian diaspora and helped to build not only marble towers but entire new communities.

It's an approach similar to the one used successfully by Zionists in British-mandate Palestine before the establishment of the state of Israel, and it may hold lessons for other Arab countries in the region.

The Palestinian economy (excluding the Gaza Strip, which is ruled by Hamas and largely sealed off by Israel) is doing remarkably well: It grew 8 per cent in 2009 and 9 per cent last year. With further investment, Mr. Fayyad's plan foresees the gross domestic product increasing 9 per cent again this year, rising to 12 per cent by 2013.

The quality of life for most people in the West Bank has never been better - not under the Ottomans (before 1917), not under the British (1917 to 1948), and not even under the Jordanians (1948 to 1967). Urban centres such as Hebron, Bethlehem, Nablus and even Jenin all display this improved quality of life, but none more than Ramallah, the West Bank's administrative capital, 20 kilometres north of Jerusalem.

The big question is whether Israeli support for this new economic order will survive the Palestinian bid to establish a sovereign state at the United Nations this fall.

Come home, get rich

Construction in Ramallah never seems to stop - new apartment buildings, office complexes, shopping malls and coffee shops.

The trade centre amazes even its owner: "I never dreamed of building such a thing as this," said Ibrahim Abushkadim, 70, wrapped tightly in his red and white checked keffiyeh on a recent blustery day as he looked out to the Mediterranean, 50 kilometres to the west.

Mr. Abushkadim and his son, Jamal, 40, the project manager, are enormously confident in the Palestinians' future and they are putting their money and energy where their mouths are.

Having got rich from the land and quarries they own in a village a few kilometres north of the city, the Abushkadims shifted their focus to the southwestern United States, where they worked for several years in construction and in getting Jamal his engineering degree. They returned to the West Bank in the late nineties to build their dream.

They're not alone.

Palestinian fashion designer Rawan Alami, 30, who studied at Montreal's Academy of Design, has a line of "Made in the West Bank" clothing that is sold in Canada and the United States. Two years ago, she returned to marry and to open a tony boutique in Ramallah.

"Even with the occupation, people still want to live," Ms. Alami said. "They want to be trendy."

Her shop, situated on the fourth floor of another new commercial building, is not for everyone. Ms. Alami deliberately avoided the walk-in shoppers. "We wanted to focus on people who were serious buyers," she said.

"Some people complain of the high prices, but they like the fact that they won't see too many other people wearing the same thing."

Business, she said, is going well.

On a Sunday morning, Ahmad Aweidah, the chief executive officer of the Palestine Securities Exchange - yes, a stock exchange - watches his computer for the market's opening trades.

There are 43 companies listed on the exchange, which has operated since 1996 but began turning a profit only in 2005. Mr. Aweidah is especially interested in PalTel, a Palestinian mobile-phone company that has the largest market share and tends to drive the market.

He likes what he sees. Despite the upheaval in the Arab world that has sent most markets into the red, the PSE is the only Arab market in the black at the end of the first quarter this year - up 1.65 per cent. "We're still on track for a very good year," he said.

Mr. Aweidah also is the principal owner of a sparkling pair of new coffee houses. ZAMN cafés are modelled after Starbucks. "Being under occupation doesn't mean you can't have good coffee," he said with an enormous smile.

His pair of premium coffee houses are built in two of the more expensive parts of the city of 40,000. Their success shows how much Palestinian society has changed. "People thought we were crazy when the first ZAMN opened," he said. The café begins operations at 7 a.m., hours before Palestinians were used to stopping for coffee.

"But we stayed the course," Mr. Aweidah said, "and people changed. They developed the habit of stopping for coffee and a croissant on the way to work." It was a sign of more affluent times.

"Now, the time from 8 to 10 is our busiest," Mr. Aweidah said. Other cafés are opening and keeping similar hours.

The most recently opened ZAMN location is near the Prime Minister's office, the headquarters of the Arab Bank and a bevy of foreign consulates.

Prime Minister Fayyad is a good customer, Mr. Aweidah said. "We deliver to him every day."

Inside the café, a pair of thirtysomething sisters in head scarves linger over a late lunch with their children, the two 11-year-old boys playing with an iPad one recently received.

The sisters' family returned from the United States to Nablus in the West Bank in 1996. Even through the violence of the last intifada, they stayed put.

"Life is very good for us," one acknowledged. "We're glad we stayed."

"But not everyone here lives like this," the other woman hastened to add.

About 14 to 15 per cent of Palestinians in the West Bank, mostly people in rural areas, still live below the poverty line, said economist Samir Barghouthi, director of the Arab Center for Agricultural Development. But it's an improvement from 23 per cent in 2004, according to the World Bank.

At the table next to the sisters, a real-estate agent in a fitted leather jacket sits with a colleague. He, too, came "home" from the United States in the nineties.

"The market's good," he said, "very good."

"My son's a doctor in Manhattan," he added by way of explanation. "But I'm doing better [financially]here."

Abdel Jawad Saleh agrees that life has never been better. The 79-year-old was elected mayor of El Bireh (a large district now part of Ramallah) in the waning days of Jordanian rule. "The Jordanians collected taxes from us, but spent very little of it here in the West Bank," he said. "There was a lot of poverty."

"Ironically," Mr. Aweidah said, under Israeli occupation, "we are the least oppressed Arabs in the region."

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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