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Almost two decades ago, the Oslo Accords brought the Israeli and Palestinian sides together and facilitated the formation of the Palestinian Authority. The birth of the PA was greeted with enthusiasm.

The sense of optimism was shared by the international community, the Palestinian population and segments of the Israeli society. For the Palestinians, the emergence of the PA was an important step towards the dream of statehood. But the PA has failed to deliver. It has failed to take initiatives, or set the agenda.

Instead it has been hostage to extremists within and without its ranks, and incapacitated by the belief that its vision can only be achieved with the active support of the US. As a result, the PA has been continuously on the back foot, reacting to events and process outside its control. And the reality of a Palestinian state is no closer than it was in 1993.

The belief in the critical role of the US to provide a breakthrough is misplaced. It assumes the US can persuade Israel to give concessions to the Palestinian side. President Barack Obama's embarrassing record on the Israeli-Palestinian dispute is cause for concern.

From the start of his presidency, Obama was clear about his commitment to the formation of a Palestinian state to stand in peace with Israel. His administration was also aware that the construction of Israeli settlements in the West Bank was a major stumbling block.

Repeated UN resolutions have asked Israel to halt settlement activity in occupied territories. In 2005, the Israeli government withdrew from Gaza, but settlement activity in the West Bank has accelerated. This is especially true around the holy city of Jerusalem, effectively building a separation ring of Israeli houses to carve Jerusalem out of the Arab West Bank.

Given the Palestinian desire to make Jerusalem the capital of its future state, Israeli settlement activity is deliberately sabotaging that vision.

Late last year, at Washington's insistence, Israel agreed to a temporary freeze on new settlement activity to allow for peace talks to resume. That freeze is now over and there is little support in the Israeli ruling coalition for another.

The humiliation of US Vice-President Joe Biden in March - when settlement construction resumed while he was visiting Israel to stress the importance of the freeze - demonstrated the limits of Washington's influence.

What would happen if the PA went ahead and declared sovereignty, as its President, Mahmoud Abbas, has threatened to do? There is a legal basis for it: UN resolution 181, adopted in 1947, called for the formation of two states for two peoples, Jews and Palestinians. All subsequent UN resolutions reaffirm this fundamental position.

Declaring sovereignty would force the hands of the PA's opponents and restore the authority of the PA among the Palestinians and the Arab world. It would rob the PA's fiercest critic, Hamas, of its most powerful propaganda tool: the accusation that the PA is spineless and works for Israeli interests. And the US and Europeans would find it difficult not to recognise the new state.

Creating a Palestinian state has been on the negotiation table for decades and is consistent with UN resolutions. The most difficult issue is Israel's reaction.

There might be a strong urge to respond militarily, but also the pragmatic realisation that any advantage would be outweighed by the enormous cost. The pressure point would be the fate of the Israeli settlements, infrastructure and transit routes that cover 40 per cent of the West Bank, and the boundaries of the new state.

Settlements have made Swiss cheese of the West Bank. While the bulk would have to be removed for a viable sovereign state to function, some could stay. There has been talk of land swaps to reflect the demographic composition of territories. A sovereign state of Palestine would be in a position of strength to negotiate any such deal.

Declaring sovereignty is no trivial matter, but the risks are ones the PA can afford to take. The weight of history is on its side. Israel's 1948 declaration of independence shortly after adoption of the UN resolution 181, in the face of existential threats, should be a lesson for the Palestinians.

In 2010, there is no such existential threat against the Palestinians. The international community is inclined to acknowledge them and there are many precedents of new states emerging.

The vision of Palestinian statehood rests on bold actions.