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.”

Next year needs to be an important year for the Arab-Israeli conflict. Unless we make real progress, the prospect of a two-state solution will slowly - or perhaps fast - slip away. The situation on the ground leaves too many people insecure, in poverty and despair, and is rapidly undermining the political process. While both sides are tiring of the conflict, they are also tiring, faster, of efforts to resolve it.

The basics of an agreement to the Israel-Palestine conflict now command an unparalleled level of consensus. There is no viable alternative to a two-state solution based on the 1967 borders: a democratic and viable state of Palestine must live peacefully alongside an Israel secure from attack and recognised by its neighbours. Jerusalem must be the capital for both, with a just settlement for refugees.

This is not just what the Palestinian President wants; it is also what the Israeli Prime Minister aspires to. It is the position of the both the outgoing and the incoming US administrations, of Europe and the Arab world. Yet our efforts to realise this vision are not succeeding. For many ordinary Palestinians and ordinary Israelis, the endless rounds of negotiations and talks are not delivering improvements on the ground. Israelis continue to feel threatened and under siege. They tried withdrawal from Gaza and Lebanon, but were rewarded only with rocket fire.

Palestinians feel cheated and abused. Their daily experience is of checkpoints, road blocks and harassment. And despite promises made at Annapolis twelve months ago, settlement expansion has increased in East Jerusalem and the West Bank. Whilst their leaders talk with Israel, ordinary Palestinians worry they are being robbed of what they are supposed to be talking about.

In Gaza it is even worse: restrictions on access for supplies through the border crossings have left its citizens short of food and medicine. Meanwhile rocket attacks tell Israelis that they cannot gain when they vacate land.

My recent visits to the region have convinced me that only a comprehensive peace can be lasting: a peace with an independent Palestinian state at its core, underpinned by a broader peace between Israel and the whole Arab world. In other words, a 23 state solution: 22 members of the Arab League plus Israel.

For almost seven years the peace process was frozen, but now serious negotiations are underway between Israel and Palestine's leaders. Syria has agreed to establish diplomatic relations with Lebanon. The Turkish government have sponsored negotiations between Damascus and Tel Aviv, and Egypt has been trying to broker Palestinian reconciliation.

That is why I welcome the renewed focus on the 2002 Arab Peace Initiative, which promises Israel full normalisation of relations with its Arab neighbours in exchange for withdrawal from occupied land. It was then, and still is today, our best hope for peace. It gives the Palestinian Authority the strong regional support it will need to do a deal, and it offers the Israelis what they really crave - stability and security in the region. That is why I welcomed the Arab League's recent letter to US President-elect Obama, reaffirming the Arab States' commitment to the Arab Peace Initiative. It is also why the UK pushed for wider European endorsement of the Arab League's position, with last week's European Council giving its firm backing to a comprehensive regional solution to the Arab-Israeli conflict.

If we are to realise a two-state solution, Israel must honour its Roadmap commitment on illegal settlements: the recent evacuation of a building in Hebron was a welcome start, but Israel must evacuate all such outposts. The UK is sending a clear message that settlements are a major obstacle to peace: we are currently working to ensure that goods produced in them do not illegally benefit from preferential customs agreements designed to help the Palestinians.

For their part, the Palestinians must refrain from violence and find a way to reunite around negotiations Hamas' continued attacks on civilians and refusal to accept existing PLO commitments, including recognising Israel, divides Palestinian ranks and leads to more suffering for the people of Gaza.

However, a comprehensive peace needs action from more than just the Israelis and Palestinians: it demands active engagement by all Arab League countries. All states in the region must support Palestinian reconciliation as a necessary precursor to a two-state solution; Egypt's role here has been particularly commendable. The Lebanese Government must build a state that can deliver peace and security for its own people, and for its neighbours. Damascus too must play its part in the Arab coalition, working to normalise relations with Israel. That means restraining the militants and curbing the flow of weapons to Hizbollah. The prize for Syria would be significant- gains well beyond Syrian interest in settlement of the Golan Heights.

Throughout 2009 Britain will work with its European allies and the US to push for a comprehensive solution. Over the last few months I've visited not just Israel and the Occupied Territories but also Syria, Lebanon and the UAE with this message. I've had talks in London with the Foreign Ministers of Saudi Arabia and Syria.

Our support is, and will remain, practical as well as political. We are providing humanitarian assistance to the people of Gaza - over $30 million for the United Nations Relief and Works Agency and others to provide urgently needed food, water and medical assistance.

We are working to strengthen the institutions which will form the backbone of an independent Palestinian state. In 2007 we pledged to give around half a billion dollars in assistance over three years, so that the Palestinian Authority can pay for essential public services. We are also providing training and equipment for the Palestinian civil police, to help them better protect the people of the Palestinian Territories.

In addition, we are helping to develop the Palestinian economy and create jobs. This week's London Business Forum on Trade and Investment in Palestine brought together Palestinian and British business people and will, we hope, increase British commercial investment in the Occupied Territories.

No-one can underestimate the scale of challenge. We are all acutely aware that a solution to the Arab-Israeli conflict has eluded us for decades. But next year must see substantial progress if we are to keep alive the prospect of peace. Failure does not bear thinking about. We can make history in 2009, but only if we all have the creativity and vision to make a comprehensive peace a reality.