The World Bank has said that less than 1 percent of Area C is open for Palestinian use. The Palestinians could expand their economy by one-third if Israel allowed them access, the bank said.
Israel has said developing the Palestinian economy is a strategic interest, but that issues such as access to Area C needed to be dealt with in negotiations.
The Rawabi developers, Masri’s Massar International and Qatar’s Diar Real Estate Investment Co, ran into trouble over the land divisions early on in the project. More than 90 percent of the city’s 631 hectares is under full Palestinian control, but the access road runs through Area C for about 3km.
Masri said he spent five years trying to get Israeli approval for the access road, with former British prime minister Tony Blair lobbying on Rawabi’s behalf with Israeli Prime Minister Benjamin Netanyahu. About two years ago, Israel granted a temporary permit for a two-lane paved road, enabling Masri to push ahead with the construction.
A request for a permanent permit is now being considered, Israeli military spokesman Major Guy Inbar said.
He said the process could only begin when Masri bought land alongside the road a few months ago so that it could be widened.
Rawabi spokesman Jack Nassar said Israel had denied permit requests because the road runs through Area C, close to a settlement, not because of land ownership issues.
The conflict over the road has caused delays and uncertainty, Masri said.
“A lot of people are skeptical about buying because they worry about the road,” he said.
“They don’t want to be in a prison,” he said, referring to previous periods of unrest in the West Bank when Israeli troops would seal Palestinian communities.
The project is also running over budget because the cash-strapped Palestinian Authority has not kept its promise to lay down infrastructure, Masri said.
He has had to raise apartment prices and is now trying to attract more buyers with easier financing, he said, adding that more than 600 apartments have been sold. Masri said he has no regrets.
“Investing in Palestine is very risky, regardless of what project,” he said.
Netanyahu has said he supports economic development in the West Bank and has eased some restrictions on Palestinian trade and movement. His office did not respond to requests for comment on Kerry’s economic plan, which includes another new city and a Dead Sea tourism resort in Area C.
US Department of State spokeswoman Jen Psaki said the economic development track is being discussed with both sides.
The top official in charge of the West Bank economy, Mohammed Mustafa, said the plan could quickly wean the Palestinian self-rule government off foreign aid, but will not go anywhere unless Netanyahu gets on board.
“I was told that some approvals [of projects] require 16 Israeli [entities] to agree to it,” he said. “This is not a recipe for success. What needs to be done is ... a political agreement for the whole package to be approved.”
Additional reporting by Lara Jakes