Abir Dandis, the mother of the two girls who were murdered in the Negev town of Al-Fura’a last week, couldn't find a police officer to listen to her warnings, neither in Arad nor in Ma’ale Adumim. Both police stations operate in areas where Israel wants to gather the Bedouin into permanent communities, against their will, in order to clear more land for Jewish communities. The dismissive treatment Dandis received shows how the Bedouin are considered simply to be lawbreakers by their very nature. But as a resident of the West Bank asking for help for her daughters, whose father was Israeli, Dandis faced the legal-bureaucratic maze created by the Oslo Accords.

The Palestinian police is not allowed to arrest Israeli civilians. It must hand suspects over to the Israel Police. The Palestinian police complain that in cases of Israelis suspected of committing crimes against Palestinian residents, the Israel Police tend not to investigate or prosecute them.

In addition, the town of Al-Azaria, where Dandis lives, is in Area B, under Palestinian civilian authority and Israeli security authority. According to the testimony of Palestinian residents, neither the IDF nor the Israel Police has any interest in internal Palestinian crime even though they have both the authority and the obligation to act in Area B.

The Palestinian police are limited in what it can do in Area B. Bringing in reinforcements or carrying weapons in emergency situations requires coordination with, and obtaining permission from, the IDF. If Dandis fears that the man who murdered her daughters is going to attack her as well, she has plenty of reason to fear that she will not receive appropriate, immediate police protection from either the Israelis or the Palestinians.

Dandis told Jack Khoury of Haaretz that the Ma’ale Adumim police referred her to the Palestinian Civil Affairs Coordination and Liaison Committee. Theoretically, this committee (which is subordinate to the Civil Affairs Ministry) is the logical place to go for such matters. Its parallel agency in Israel is the Civilian Liaison Committee (which is part of the Coordination and Liaison Administration - a part of the Civil Administration under the Coordinator of Government Activities in the Territories).

In their meetings, they are supposed to discuss matters such as settlers’ complaints about the high volume of the loudspeakers at mosques or Palestinians’ complaints about attacks by settlers. But the Palestinians see the Liaison Committee as a place to submit requests for permission to travel to Israel, and get the impression that its clerks do not have much power when faced with their Israeli counterparts. In any case, the coordination process is cumbersome and long.

The Palestinian police has a family welfare unit, and activists in Palestinian women’s organizations say that in recent years, its performance has improved. But, as stated, it has no authority over Israeli civilians and residents. Several non-governmental women’s groups also operate in the West Bank and in East Jerusalem, and women in similar situations approach them for help. The manager of one such organization told Haaretz that Dandis also fell victim to this confusing duplication of procedures and laws. Had Dandis approached her, she said, she would have referred her to Adalah, the Legal Center for Arab Minority Rights in Israel, which has expertise in navigating Israel’s laws and authorities.

John Kerry revealed his long-awaited plan for peace in the Middle East on Sunday, hinging on a $4bn (£2.6bn) investment in the Palestinian private sector.

The US secretary of state, speaking at the World Economic Forum on the Jordanian shores of the Dead Sea, told an audience including Israeli president Shimon Peres and Palestinian leader Mahmoud Abbas that an independent Palestinian economy is essential to achieving a sustainable peace.

Speaking under the conference banner "Breaking the Impasse", Kerry announced a plan that he promised would be "bigger, bolder and more ambitious" than anything since the Oslo accords, more than 20 years ago.

Tony Blair is to lead a group of private sector leaders in devising a plan to release the Palestinian economy from its dependence on international donors. The initial findings of Blair's taskforce, Kerry boasted, were "stunning", predicting a 50% increase in Palestinian GDP over three years, a cut of two-thirds in unemployment rates and almost double the Palestinian median wage. Currently, 40% of the Palestinian economy is supplied by donor aid.

Kerry assured Abbas that the economic plan was not a substitute for a political solution, which remains the US's "top priority".

Peres, who had taken the stage just minutes before, also issued a personal plea to his Palestinian counterpart to return to the negotiations.

"Let me say to my dear friend President Abbas," Peres said, "Should we really dance around the table? Lets sit together. You'll be surprised how much can be achieved in open, direct and organised meetings."

Thick locks hug the front gates of shuttered shops, now covered in graffiti and dust from lack of use. Only a handful of customers pass along the dimly lit road, sometimes stopping to check the ripeness of fruits and vegetables, or ordering meat in near-empty butcher shops.

“All the shops are closed. I’m the only one open. This used to be the best place,” said 64-year-old Mustafa Sunocret, selling vegetables out of a small storefront in the marketplace near his family’s home in the Muslim quarter of Jerusalem’s Old City.

Amidst the brightly coloured scarves, clothes and carpets, ceramic pottery and religious souvenirs filling the shops of Jerusalem’s historic Old City, Palestinian merchants are struggling to keep their businesses alive.

Faced with worsening health problems, Sunocret told IPS that he cannot work outside of the Old City, even as the cost of maintaining his shop, with high electricity, water and municipal tax bills to pay, weighs on him.

“I only have this shop,” he said. “There is no other work. I’m tired.”

Abed Ajloni, the owner of an antiques shop in the Old City, owes the Jerusalem municipality 250,000 Israeli shekels (68,300 U.S. dollars) in taxes. He told IPS that almost every day, the city’s tax collectors come into the Old City, accompanied by Israeli police and soldiers, to pressure people there to pay.

“It feels like they’re coming again to occupy the city, with the soldiers and police,” Ajloni, who has owned the same shop for 35 years, told IPS. “But where can I go? What can I do? All my life I was in this place.”

He added, “Does Jerusalem belong to us, or to someone else? Who’s responsible for Jerusalem? Who?”

Illegal annexation

Israel occupied East Jerusalem, including the Old City, in 1967. In July 1980, it passed a law stating that “Jerusalem, complete and united, is the capital of Israel”. But Israel’s annexation of East Jerusalem and subsequent application of Israeli laws over the entire city remain unrecognised by the international community.

Under international law, East Jerusalem is considered occupied territory – along with the West Bank, Gaza Strip and Syrian Golan Heights – and Palestinian residents of the city are protected under the Fourth Geneva Convention.

Jerusalem has historically been the economic, political and cultural centre of life for the entire Palestinian population. But after decades languishing under destructive Israeli policies meant to isolate the city from the rest of the Occupied Territories and a lack of municipal services and investment, East Jerusalem has slipped into a state of poverty and neglect.

“After some 45 years of occupation, Arab Jerusalemites suffer from political and cultural schizophrenia, simultaneously connected with and isolated from their two hinterlands: Ramallah and the West Bank to their east, West Jerusalem and Israel to the west,” the International Crisis Group recently wrote.

Israeli restrictions on planning and building, home demolitions, lack of investment in education and jobs, construction of an eight-foot-high separation barrier between and around Palestinian neighbourhoods and the creation of a permit system to enter Jerusalem have all contributed to the city’s isolation.

Formal Palestinian political groups have also been banned from the city, and between 2001-2009, Israel closed an estimated 26 organisations, including the former Palestinian Liberation Organisation headquarters in Jerusalem, the Orient House and the Jerusalem Chamber of Commerce.

Extreme poverty

Israel’s policies have also led to higher prices for basic goods and services and forced many Palestinian business owners to close shop and move to Ramallah or other Palestinian neighbourhoods on the other side of the wall. Many Palestinian Jerusalemites also prefer to do their shopping in the West Bank, or in West Jerusalem, where prices are lower.

While Palestinians constitute 39 percent of the city’s population today, almost 80 percent of East Jerusalem residents, including 85 percent of children, live below the poverty line.

“How could you develop [an] economy if you don’t control your resources? How could you develop [an] economy if you don’t have any control of your borders?” said Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, of “this kind of fragmentation, checkpoints, closure”.

“Without freedom of movement of goods and human beings, how could you develop an economy?” he asked.

“You can’t talk about independent economy in Jerusalem or the West Bank or in all of Palestine without a political solution. We don’t have a Palestinian economy; we have economic activities. That’s all we have,” Odeh told IPS.

Israel’s separation barrier alone, according to a new report by the United Nations Conference on Trade and Development (UNCTD), has caused a direct loss of over one billion dollars to Palestinians in Jerusalem, and continues to incur 200 million dollars per year in lost opportunities.

Israel’s severing and control over the Jerusalem-Jericho road – the historical trade route that connected Jerusalem to the rest of the West Bank and Middle East – has also contributed to the city’s economic downturn.

Separation of Jerusalem from West Bank

Before the First Intifada (Arabic for “uprising”) began in the late 1980s, East Jerusalem contributed approximately 14 to 15 percent of the gross domestic product (GDP) in the Occupied Palestinian territories (OPT). By 2000, that number had dropped to less than eight percent; in 2010, the East Jerusalem economy, compared to the rest of the OPT, was estimated at only seven percent.

“Economic separation resulted in the contraction in the relative size of the East Jerusalem economy, its detachment from the remaining OPT and the gradual redirection of East Jerusalem employment towards the Israeli labour market,” the U.N. report found.

Decades ago, Israel adopted a policy to maintain a so-called “demographic balance” in Jerusalem and attempt to limit Palestinian residents of the city to 26.5 percent or less of the total population.

To maintain this composition, Israel built numerous Jewish-Israeli settlements inside and in a ring around Jerusalem and changed the municipal boundaries to encompass Jewish neighbourhoods while excluding Palestinian ones.

It is now estimated that 90,000 Palestinians holding Jerusalem residency rights live on the other side of the separation barrier and must cross through Israeli checkpoints in order to reach Jerusalem for school, medical treatment, work, and other services.

“Israel is using all kinds of tools to push the Palestinians to leave; sometimes they are visible, and sometimes invisible tools,” explained Ziad al-Hammouri, director of the Jerusalem Centre for Social and Economic Rights (JCSER).

Al-Hammouri told IPS that at least 25 percent of the 1,000 Palestinian shops in the Old City were closed in recent years as a result of high municipal taxes and a lack of customers. “Taxation is an invisible tool…as dangerous as revoking ID cards and demolishing houses,” he said. “Israel will use this as pressure and as a tool in the future to confiscate these shops and properties.”

Tony Blair made a strong case yesterday for why it might be possible for outside brokers — such as himself — to lessen the damage done by the Israeli-Palestinian deadlock, even if they cannot yet resolve it. Speaking to a House of Commons committee, with many references to Northern Ireland (and, he might have added, to his creation of new Labour) he clearly drew on his belief in his personal ability to bridge incompatible positions.

It's easy, after Iraq, to recoil from his self-belief: that with a direct gaze, leaning across a table, he can bring enemies together. He overstates the parallels with Northern Ireland. He put a lot of weight on the unknown future: the next American president, the next Israeli prime minister, the reaction of the militant Islamic Hamas to events yet to unfold. But his account's strength lay in not pretending to influence more than a sliver of the picture. In recommending tiny steps and low expectations, he struck the right tone (and Barack Obama has shown, in this week's abrupt pro-Israel gesture, how to get it wrong).

After nearly a year of Blair's absence from the British stage, it is easy to forget the expansive familiarity that wrongfoots fans and critics. “How are you guys doing?,” he said, settling in before the Commons International Development Select Committee, as a tanned traveller dropping in on his old home town; their questions, in comparison, were dry, tangled and deferential. Gesturing with fingers pressed into a tent — the universal mannerism, it seems, of those who pronounce on the Middle East — he expanded on the deal he struck last month as the envoy of the Quartet (the US, EU, Russia and United Nations).

The scheme lifts some West Bank checkpoints to help the economy, while demanding Palestinian security improvements, but the changes had not yet happened, he acknowledged. And he cautioned that the crisis in Gaza, blockaded by Israel in retaliation for rocket attacks, “could overwhelm everything . . . the current situation won't hold and isn't acceptable”.

But Northern Ireland showed that “if you get some normality and calm, everything becomes possible”. He cited, as any optimist does, the support of most Israelis and Palestinians for a two-state solution, and added that “if the only alternative . . . is a one-state solution, then there's going to be a hell of a fight”.

His old skill in professing understanding of each side has been put to good use. To those who want talks with Hamas even though it does not recognise Israel, he said: “I totally understand people who say that [although] it's not the Quartet's position” while adding that “you can't dispute that Hamas has a military grip on Gaza and if they wanted to stop these [rocket] attacks they could”. He spent much time asserting impartiality, noting: “I've come to realise that what each side says about the other is essentially true.” He did argue that Israel “has to go farther and faster, especially on the West Bank”, and that some of its settlements “are illegal under Israeli law, never mind international law”, but did not mention its recent decision to expand them.

He said that “there will a real problem if a new American president takes a couple of years” to focus on the problem, which, he argued, was “fundamental to security in the region and to peace between Islam and the West”. Iraq may have compromised his own ability to make that case, one MP suggested yesterday. But still, he made a good case that his time in Bethlehem hotels counting tourists has not been wasted, and that there are parts of the deadlock that are susceptible to the talking cure.

Today's conference in Paris, a drive to breathe life into the Palestinian economy, is as easily derided as last month's summit in Annapolis, but it is worth much more.

There are three particularly valuable consequences. The first is that, judging by yesterday's pledges, the meeting will raise most of the $5.6 billion over three years that Salam Fayyad, the Palestinian Prime Minister, has requested. That should provide some immediate relief from deteriorating conditions in the West Bank, although the package offers essentially nothing to Gaza. The US's aim in its donation is to show Palestinians that life is better in the West Bank than in Hamas-controlled Gaza, and so to “reward” moderates and punish supporters of militants.

Second, Fayyad, an internationally respected economist, has promised deep reforms of the Palestinian bureaucracy, which under Yassir Arafat had an immaculate record of corruption and inefficiency. “Usually in the past we wrote a cheque and we didn't know where it was spent”, said Bernard Kouchner, the French Foreign Minister. This time, the World Bank and the International Monetary Fund will issue reports every three months to help the donors to track the money — although there remain important questions about how it should be spent.

Third, giving the money will focus donors' minds on the paralysed politics of the region, and help to stop their attention wandering. That is particularly useful in the case of the Arab donors, assuming that their cash follows their promises (as it has not always done).

But on its own the cash is not enough to bring the revival the conference wants. Without substantial and urgent changes by Israel to its lockdown control of Palestinian movement on the West Bank, the area will remain as the World Bank now describes it: a “shattered economic space” incapable of much activity.

The revival now needs a response from Israel that goes beyond its insistance that it cannot compromise its own security, and cannot relax controls until Palestinian security is able to ensure that no terrorism attempts follow. “The central issue is the Palestinian Authority's ability to deal as it should with the subject of security, to eradicate the terror organisations”, said Ehud Olmert, the Israeli Prime Minister.

None of the donors has disputed Israel's right to protect its people against suicide bombers and rocket attacks. It has every reason to point out how often those followed broken promises by Palestinian leaders. But to pretend that it can seal itself off from a population living so near by, in worsening conditions, with soaring resentment, is delusion.

As the World Bank reports, the ability of Palestinians on the West Bank to carry out commercial life has been choked off by the permits from Israeli authorities required to travel between the main towns, and hundreds of checkpoints that make travel unpredictable even with a permit. The bank acknowledges Israeli security concerns, but also argues that the restrictions exist to protect Jewish settlers in the West Bank “at the expense of the Palestinian population”.

Israel now needs to address these concerns in detail. Many, for example, might grant it the principle of its separation barrier but contest the route. But the answer that Israel cannot contemplate any change at all in its control network is no answer at all. The risk is that the funds raised by this conference can be used for nothing but humanitarian aid, because economic life dwindles further, while the militants steadily win over the moderates even on the West Bank.

The original conception of the Government’s report on reviving the Palestinian economy, published yesterday, was a good one – when Gordon Brown commissioned it two years ago.

The aim was to find ways to bolster that economy, deliberately separate from the politics. It is an honourable principle that there are few situations so bad that they cannot be improved, even if they cannot be resolved. The approach appealed to Brown, when Chancellor, as a way to avoid Tony Blair’s grandstanding, while tackling problems on the ground.

But the past two years have made a nonsense of this approach – and incidentally, of Blair’s new job, which is supposed to focus on the Palestinian economy. Hamas’s victory in the January 2006 elections, the collapse of the joint Hamas-Fatah Government, Hamas’s seizure of Gaza in June, and the disintegration of the economy under Israeli security curbs make it impossible to divorce the economic from the political. Without political progress, there will not be economic progress; there may not even be much worth calling a Palestinian economy.

In a devastating pair of reports in March and May, the World Bank showed how Israeli security clampdowns since the second intifada have helped to fracture the economy. It called the West Bank a “shattered economic space”, divided by Israeli settlements, their access roads and checkpoints. It said that “freedom of movement for Palestinians within the West Bank is the exception rather than the norm”, and that the permits which curb Palestinian movement between cities restrict access to more than half of the land. It added that “while Israeli security concerns are undeniable and must be addressed”, it believed that curbs also helped to expand settlements, which have more than doubled since the 1993 Oslo Accords.

But yesterday’s report, by Jon Cunliffe, the Prime Minister's Adviser on International Economic Affairs, with Ed Balls, MP, takes a long sidestep around sensitive issues of Israeli policy: the settlements, the constraints on the West Bank, and the economic isolation of Gaza since June as a punishment for Hamas’s takeover.

It acknowledges them, but with understatement, regretting that foreign aid is now the heart of economic life. Its best point is to spell out the consequences: that the Palestinian population may match that of Israel by 2050; that half of it is now under 14, and education is patchy. The prospect is one of rising unemployment among young men, a recipe for violence. But the report then calls on “the private sector” to cure that ill. It is faultless logic that new jobs would have to come from there, but fanciful in the current conditions to think that they will.

In its recommendations for “immediate action”, it includes the operation of “continuous border crossings into and out of Gaza” – again, wishful thinking. Another in the same list is “immediately cease all Israeli settlement expansion”. But this is at the heart of the political progress that has been so elusive. The title of the report reveals why it is out of date; there isn’t peace in the Middle East, and the “economic aspects” are a fantasy, dressed up in the language of venture capital.

The fate of most reports on the Middle East is to be quickly forgotten. This one deserves it.

It’s hard to fault a man for saying outright what the world already knows. But the Israeli Government expended much effort yesterday in maintaining that the Prime Minister had not, in a blurted sentence on German television, formally acknowledged the possession of nuclear weapons. Does it matter? Would it make much difference if Israel now dropped its policy of ambiguity and said that it had nuclear weapons?

Yes, a bit, and enough to make that shift unwelcome, say Western officials and analysts. Anything that might provoke extra Arab interest in nuclear programmes is unwelcome; it would also distract attention from Iran’s ambitions.

But those concerns are ones of image and diplomacy. The presumed reality of Israel’s weapons capability has influenced the tense calculations of the region for years. The new and more destabilising factor is Iran, and whatever its own studied ambiguity, its presumed intention is to acquire the option of nuclear weapons.

Yesterday’s fuss over what Ehud Olmert actually said had the air of a one-day row, but a long day at that. In an interview with the N24 cable news channel in Germany on Monday, Olmert asked about Iran’s nuclear programme, said that the US, France, Britain and Russia had nuclear weapons but were “civilised countries that do not threaten the foundations of the world”. He then added: “Iran openly, explicitly and publicly threatens to wipe Israel off the map. Can you say that this is the same level, when they are aspiring to have nuclear weapons, as America, France, Israel, Russia?”

A storm of articles in the Israeli press yesterday mused over whether Olmert’s remark represented a deliberate change of policy, many authors displaying perfect ambivalence themselves. In an analysis in Yedioth Ahronoth, Ronen Bergman asked “Is this a deliberate dispelling of the ambiguity or amazing coincidence? It’s hard to say.”

Speculation that this was indeed a change, intended to warn Iran, and perhaps prompted by the US, was provoked by a similar comment earlier this month from Robert Gates, President Bush’s new Secretary of Defence. In his Senate confirmation hearing, Gates said: “They [Iran] are surrounded by powers with nuclear weapons — Pakistan to their east, the Russians to the north, the Israelis to the west and us in the Persian Gulf.”

Olmert himself, appearing embarrassed, yesterday said in Berlin, to an excited Israeli press corps, that “I stress that the state of Israel will not be the first country in the Middle East to introduce nuclear weapons”, in three separate answers with slight variations.

An Israeli government spokesman yesterday added that “there is no change in the well-known Israeli policy”. Mark Fitzpatrick, proliferation analyst at the Institute for Strategic Studies in London, said that the remark “produced such consternation in the Foreign Ministry” that he assumed it was a slip of the tongue.

Fitzpatrick is among those arguing that Israel’s formal acknowledgement of having nuclear weapons would be undesirable. The formalising of its status might put future options out of reach, he suggested, such as Israel concluding that it had enough fissile material and shutting down its reactor.

Gary Samore, at the Council on Foreign Relations in New York, also argued that declaration would increase the risk of a regional nuclear arms race. “I do think that if Israel formally confirmed [having weapons] it would put more pressure on Arab countries to develop their own — which they are threatening to do anyway because of Iran.”

He is sceptical that declaration would do anything to boost the chances of an eventual regional arms deal, given that Israel is not likely to give up its weapons, and Iran’s refusal to recognise its right to exist.

Officials and analysts argue that even if undeclared, Israel’s weapons retain their value as a deterrent because everyone believes that it has them. That assumes, in Iran’s case, that the regime can be deterred in the conventional sense and does not value the afterlife so highly that it is indifferent to annihilation. European officials believe that its recent behaviour — and even that since the 1979 revolution — suggests that it can be deterred.

The same cannot be assumed of militant groups with Iranian backing, if they got the bomb. If there is one residual benefit to the Litvinenko poisoning drama, and the looping trails of polonium-210 now detected across Europe, it may be in warning governments that they cannot hope to shuffle nuclear material into other hands without a high chance of being caught.