By Mohammed Assadi
RAMALLAH, West Bank (Reuters) - The Palestinians are ready for statehood now, according to a report to be presented to major aid donor countries in Brussels this week by Prime Minister Salam Fayyad.
He will present facts and figures to show how his Palestinian Authority has used hundreds of millions of dollars in foreign assistance over the past two years to create health, education, energy, water, security, justice and housing services.
"I believe that 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," Fayyad says in the 63-page document.
But he underlines that unless Israel's military occupation comes to an end, these achievements cannot go far enough.
"Without a change to the status quo, the positive impact of internal reforms to build a strong and healthy economy will be limited in both scope and sustainability," the report says.
Palestinian leaders aim to ask the United Nations General Assembly in September for recognition of statehood on all of the territory Israel occupied in 1967, including Gaza -- over which Fayyad and President Mahmoud Abbas actually have no control.
Israel has warned that such unilateral moves are not a realistic substitute for a Middle East peace treaty that would establish a Palestinian state by mutual consent.
But the Palestinian leadership is plowing ahead with clear signs of international encouragement. The number of countries that recognize Palestine as a state has risen this year to 110, more than half the membership of the U.N.
The World Bank and the International Monetary Fund last week praised the performance of the Palestinian Authority. The World Bank said Palestinians were "well-positioned for the establishment of a state at any point in the near future," despite the "stringent Israeli restrictions" imposed on them.
Fayyad's report says his government has connected all Palestinian residential areas, including remote ones, to the electricity grid, and paved and fixed 2,250 km (1,400 miles) of streets.
It says the overall Palestinian economy witnessed real GDP growth of 9.3 percent in 2010, cutting unemployment from 26.6 percent in the third quarter to 23.4 percent in the fourth.
As a reflection of improved business confidence in the West Bank, 591 new companies were registered between November 2010 and February 2011, with a total capital of $392.5 million.
But unemployment in Gaza, ruled since 2007 by Hamas Islamists hostile to Abbas and Fayyad, stands at 37.4 percent compared with 16.9 percent in the West Bank.
While they make up two parts of the same future state in theory, Gaza and the West Bank have never been more divided, politically and geographically. Abbas and Fayyad want peace with Israel. Hamas rejects any deal that accepts the Jewish state.
The Israeli occupation, says the report, remains the "most significant challenge to economic development in Palestine."
"Restrictions on movement and access, as well as lack of control over borders and natural resources continue to be real barriers to the growth of the economy."
Palestinians administer their own affairs in islands of land in a West Bank landscape peppered with Jewish settlements, Israeli military bases and no-go zones.
They have no access to some 60 percent of West Bank land.
"Lack of access to natural resources for example, including land and water, severely constrains any sustainable progress through out the economy," the report says.
In spite of such challenges, "the government will continue to build on the achievements of the past three years to ensure readiness for statehood by September 2011," Fayyad will tell donor states.
"Building Palestine. Achievements and Challenges" will be presented on April 13 to the Ad Hoc Liaison Committee (AHLC), a 12-member committee of the European Union and United States which serves as the principal policy-level coordination mechanism for development assistance to the Palestinians.
(Editing by Douglas Hamilton and Jon Hemming)