FIVE YEARS. That was all the time it was supposed to take for Palestinians to establish an independent state in the West Bank and Gaza. When Palestinian leader Yasser Arafat and Israeli prime minister Yitzhak Rabin shook hands on the White House lawn on September 13th, 1993, U.S. president Bill Clinton was quick to declare that “the peace of the brave is within our reach.”

The Oslo Accords were hailed as a success internationally, earning Arafat, Rabin and Israeli foreign minister (now president) Shimon Peres the Nobel Peace Prize. Arafat staged his jubilant return to the West Bank and, with the support of the international community, Palestinians began building the necessary institutions for their promised state – including their own ministries and security force.

That was almost 20 years ago. But instead of witnessing the birth of an independent state, Palestinians have thousands of new Israeli settlers on their territory, an unelected government with very little authority, and security forces who lack the power to protect them.

LAST MONTH, as Palestinian youths clashed with Israeli forces in the West Bank city of Ramallah, the Palestinian Authority (PA) organized a commemorative event for Nakba Day far from the usual flash points with Israeli soldiers. Yom al Nakba (“The day of the catastrophe”) marks the creation of Israel 64 years ago and the expulsion of hundreds of thousands of Palestinians from their homes. In the recently renamed Yasser Arafat Square, performers sung to a crowd of flag-hoisting Palestinians under the watch of the neatly uniformed but poorly armed Palestinian police. These forces dot the streets of urban centers in the West Bank, the only areas where Palestinians have some degree of autonomy.

Several activists stood in the square holding placards with the names of the villages from which their families were expelled, demanding the right to return. “Our leaders have to stop the negotiations with Israel and take a stand. It has got us nothing,” said one of them, Wattan Miqdady, wrapped in a black-and-white checked keffiyeh. “Oslo is the worst thing Palestinians ever did.”

At 23 years old, Migdady has never voted. She is part of the “Oslo generation” – the twenty-somethings who have known nothing but life under the Accords. By the time she was in high school, she should have been living in an independent, democratic country. She currently lives under military occupation and a Palestinian leadership that was never elected.

A huge number of Palestinians worldwide – around 70 per cent of whom are refugees – still harbor hopes of a return to their ancestral villages inside present-day Israel. Most of the roughly seven million Palestinian refugees live in neighboring Arab states, many within 100 kilometers of Israel’s current borders. But under the Oslo Accords the issue of return to Israel for these refugees was postponed for “final status negotiations” – issues to be decided within five years of the signing of Oslo – as were the key points of borders and the status of Jerusalem. The failure to nail down an agreement on those vital issues at the time was always going to mean trouble, says left-wing Israeli politician Yossi Beilin, one of the central architects of the Accords.

Beilin was optimistic in 1992, when he started back-channel talks with Mahmoud Abbas, who is now the Palestinian president, but, back then, was still in Tunis with the Palestinian Liberation Organization (PLO) leadership. Beilin says he believed that Israel had found its partner for peace. His optimism didn’t last long.

“I was very worried about these five or six years of an interim solution,” he says. “And that’s why, in October, a month [after we signed], I went to Arafat and said ‘If we don’t move immediately, the forces in your camp and in mine will do whatever they can to torpedo any kind of permanent agreement.’”

In the Ibrahimi Mosque in Hebron, the marks of the first blow to the Accords are still visible in the centuries-old ornate walls. In February 1994, doctor Baruch Goldstein, a far-right Israeli settler from New York, entered the mosque and shot 29 worshippers dead. After the traditional 40 days of mourning, Hamas – then an emerging militant group – responded. A 19-year-old Hamas member blew himself up at a bus station in the Israeli town of Afula, killing eight Israelis and setting in motion a cycle of violence that eventually grew into the Second Intifada.

“The Second Intifada led a great majority of Israelis – and I’m talking about leftists as well as those to the political right and center – to feel that we cannot make an agreement with the Palestinians,” says Ira Sharkansky, professor emeritus of political science and public administration at the Hebrew University of Jerusalem. “They are not ready to make a full agreement with us.”

The specified five-year interim period has dragged on into almost two decades of unproductive negotiations. “The joke is that the Oslo agreement – an interim agreement, a corridor to a permanent agreement – became a kind of a living room that has been very, very comfortable,” says Beilin, of the arrangement he helped to create.

In April this year, Beilin wrote an open letter to his former partner in peace Mahmoud Abbas asking him to dissolve his Palestinian Authority and “end this farce” [of trying to establish a peace under the Oslo Accords]. While Beilin still hopes for a negotiated two-state solution, he says the extended interim period has removed any sense of urgency or pressure to attain peace.

SAMIR AWAD, a professor of political science at the Birzeit University near Ramallah, suggests part of the reason that Palestinian leaders have refused to scrap the Oslo Accords and start over can be found by examining why the PLO signed them in the first place.

“They were guarding their own interests and, I would say, were not so keen on representing the Palestinian people’s interests,” says Awad. “In many ways, Oslo helped realize the interests and ambitions of the PLO and the people outside of Palestine, but not so much the people inside.”

The Accords were signed not by Palestinians in the territories the agreement covered, but by Arafat and the Tunis-based leadership of the PLO, who had already been kicked out of Jordan and Lebanon. It was their defense of the Palestinian cause, and attacks against Israel from these countries, that established the PLO as ‘legitimate’ representatives of the Palestinian people.

“But,” says Awad, “they were becoming irrelevant. With the First Intifada here in the West Bank and Gaza, the PLO became less and less important. There was inter-Palestinian rivalry between the new elite that were emerging as a consequence of the Intifada and the traditional leadership of the PLO. [The PLO] did not want to share power – not with Hamas as a new group, and not with the rank-and-file of Fatah in the West Bank and Gaza.”

There were benefits to the Accords, says Awad, particularly for the hundreds of thousands of Palestinians who were able to return from exile with Arafat. “It also helped build the institutions of the Palestinian Authority,” he adds. “But this is a quasi-state – without sovereignty.”

In order to continue receiving the millions of dollars of international funding that sustains the PA each year, leaders are required to continue the Oslo process and demonstrate, at the very least, a willingness for peace talks with Israel.

But while peace talks are mandatory, elections are not. Slowly, under the guise of the pursuit of peace, this quasi-state has come to resemble, more and more, the dictatorships that have been toppled across the Arab world over the last 18 months.

In 2006, Palestinians did get the chance to vote. And many chose Hamas. Since then, the PA (whose leadership were decidedly unhappy with that outcome) has repeatedly delayed elections, with little opposition from its international donors. And despite its declining legitimacy, foreign countries continue to pour money into the security forces the PA controls.

“The security forces implement a certain agenda. And that isn’t the national agenda: it’s influenced tremendously by the Americans and the Israelis,” says Awad. “The security forces are fine, but are directing most of their activity to protecting Israel from Palestinian groups, most notably Hamas.”

Since 2007, these national forces have arrested hundreds of Hamas affiliates across the West Bank, and not only Islamists. In February 2011, young activists staged a rally in Ramallah’s central Al-Manara Square to show their support for the Egyptian uprising. PA security forces took violent action, beating protestors. Human Rights Watch went as far as calling for foreign aid to be cut: “The Palestinian Authority should immediately make clear that its ‘state-building’ training of security forces does not include beating peaceful demonstrators,” said Sarah Leah Whitson, Middle East and North Africa director at Human Rights Watch. “The PA should take action against the responsible police officers or the U.S. and E.U. should find another use for their taxpayers’ money.”

While capable of arresting those who threaten Israel’s security or pose a challenge to the PA, the Palestinian security forces can do nothing to protect Palestinians themselves from attacks and encroachment by Israeli settlers. The Oslo Accords divided the West Bank into three sections: Areas A, B, and C. Most Israeli settlements lie in the latter, which makes up over 60 per cent of the territory. The settlements often encroach on Palestinian villages. But when the (usually well-armed) settlers attack Palestinians, the Palestinian security forces sit idly by, their hands tied by the conditions of their funding and training by foreign states.

“The [Oslo] process has turned an Israeli occupation into an international regime of control,” says Robert Blecher, Director of the Arab-Israeli Project for the International Crisis Group. “Before 1993 it was the Israelis that were clearly the occupiers of the West Bank and Gaza. Now, you have the Palestinian Authority overseeing daily administration within the major Palestinian population centers; you have the international community who pays for this; and you have Israel exercising overall security responsibility [with the power to] veto pretty much anything.”

THE AGREEMENT THAT PROMISED A PALESTINIAN STATE in just five years has instead created a comfortable environment for thousands of new settlers to move into the West Bank. As a result, the territory of any future state is jeopardized.

In the 19 years since the Accords were signed, the population of settlers in the West Bank has more than tripled. In 1996, there were just shy of 140,000 Israeli settlers in the West Bank. Today, that number is almost half a million – with another 200,000 living in occupied East Jerusalem, according to Israeli rights group B’Tselem.

While many Israelis came to the West Bank for religious reasons – guided by their belief that god had promised them this land – many others moved across the green line for more prosaic reasons: cheap, suburban homes and discount living.

The settlement of Kochav Yaakov, 15 kilometers from Jerusalem, has seen its population grow sixfold in the last 15 years. That’s not just because of the manicured lawns, stunning vistas or the community website’s promise that you are moving to “the REAL Israel.” Settlement living is cheap. Property prices are a fraction of the cost of cities like Tel Aviv and many basic goods and services are far less expensive. A bus ride from Kochav Yaakov to Jerusalem costs just 3.3 shekels ($0.90). You’d pay twice that amount to travel just a few blocks in Tel Aviv.

Such comparisons fuel accusations that the Oslo Accords – and subsequent peace talks – have simply acted as a cover for the continued colonization of the Palestinian Territories. Many Israelis agree with political science professor Sharkansky’s claim that the 1967 borders are “out the window.”

“They are 50 years old,” he says. “They can’t be the starting point for negotiations. We need to start from where we are now.” Meaning that Israel’s landgrab would become legitimized.

Blecher says the parties entered into the agreement with fundamentally different perceptions of these borders. “For Israelis, these territories were disputed. For Palestinians they were occupied.”

Disputed or occupied, the West Bank looks very different than it did when the leaders shook hands on the White House lawn. New settlements have sprouted on hilltops across the West Bank, while existing settlements have expanded. Most start as renegade outposts and grow into well-equipped cities, changing the area’s landscape and demographics beyond recognition from the time of the Oslo Accords.

AND IT'S NOT JUST LAND THAT RAISES PROBLEMS; Palestine’s economy is also hamstrung by the peace process, its purse strings controlled by Israel and foreign donors.

Those who still support the continuing adherence to the Oslo Accords often cite Ramallah – now the Palestinian administrative center – as a symbol of their success. Lavish villas and modern skyscrapers now rise from the rocky hillsides. The Palestinian elite and aid workers dine in upscale restaurants and drive SUVs on the newly repaved streets. Stability – resulting from security cooperation with Israel – has fostered economic progress in the de-facto capital.

“There’s been considerable growth in the West Bank,” says Sharkansky. “There’s a lot less violence, there is more economic development for Palestinians and there is more security for Israel.”

The International Monetary Fund agrees. Last year, the IMF released a statement saying the Palestinian economy is ready for statehood. Despite an unemployment rate of around 25 per cent, the economy is growing. But this pledge of support came with a caveat: Growth was at risk, should someone not make up the PA’s $300 million budget shortfall caused by a decrease in aid from regional donors. Foreign funds make up just over a quarter of the total Palestinian GDP of  $3.7 billion.

However, this aid money has bolstered a service economy, rather than fostering industry or sustainable development. And, simultaneously, the Palestinian Territories have become a captive market for Israel. The shelves of Palestinian supermarkets are stocked with Israeli products – milk, wine, produce and bottled water – many of which, to add insult to financial injury, are often settlement-made.

But there are Palestinian entrepreneurs who offer hope of economic liberation – and an end to aid dependency. Khalid Sabawi returned to the West Bank from Canada with enthusiasm and a viable business idea: to install geothermal energy systems in new West Bank buildings, saving Palestinians money and reducing their dependence on Israel, which provides most of their electricity.

In his office in a modern glass building perched on a hillside in Ramallah, Sabawi discusses his aspirations and the obstacles he faces. The most obvious: Israel controls all the West Bank’s borders and entry points. But it’s not just restrictions on trade and construction in the West Bank that impede the economy, he suggests, it’s also the aid itself.

“I have a very difficult time hiring educated, professional Palestinians,” Sabawi explains. “NGOs’ huge budgets allow them to offer inflated salaries; three to four times what the local private sector can afford. This drives up the cost – and decreases the supply – of labor. It undermines our ability to build an independent, autonomous Palestinian economy.”

The economic changes wrought by the Accords have caused older, traditional Palestinian industries to collapse altogether. In Hebron, Hibrawi Textiles – the last Palestinian keffiyeh makers – struggle to stay afloat. Arafat made the traditional Arab checkered black-and-white scarves a symbol of Palestinian nationalism and keffiyehs were once made all across the Palestinian Territories. That is no longer the case.

Over the clack of the looms, Jooda Hibrawi explains what dropped their production from over 700 keffiyehs per day to less than 200: After Oslo, the Palestinian Territories were opened to international markets.

“We didn’t expect Palestine to be opened up to the world market,” says Hibrawi. “Ninety per cent of keffiyehs are now imported from China.”

Further, equally problematic, economic changes were brought about by the Accords. Before Oslo, Israel was responsible for providing services in the territories it occupied, but the agreement shifted that responsibility to the PA, which now oversees health and education, among others. All of which seems like a good idea. But Oslo also put Israel in charge of collecting custom duties and a number of other taxes on behalf of Palestinians. So if the Palestinians do anything to upset the Israeli authorities, they are able to simply delay the transfer of these funds.

This, says Awad, the Ramallah-based political science professor, is an indication of what he calls the “pseudo-boom” of the Palestinian economy. “Yes, we realize right now the economy is emerging in the West Bank. But that can be reversed immediately. How? The minute Israel decides to cut off the transfer of tax to the Palestinian Authority, they cannot pay the salaries.”

“We saw the detrimental effects of donor aid in 2006 when Palestinians elected their own government,” says Sabawi. “What happened? The donor tap was turned off and you had 150,000 employees of the Palestinian Authority with no salaries and NGOs shutting down.”

This past September, when President Abbas declared he would go to the United Nations and ask for recognition of a Palestinian state, that was exactly how Israel reacted again, withholding the approximately $135 million in taxes that should be transferred to the Palestinian Authority every month. This accounts for about two-thirds of the PA’s budget. At the same time, the U.S. halted the transfer of million of dollars of aid bound for development projects, which threatened both assistance and jobs.

“[Israel] has been able to recruit the international community as well as segments of the Palestinian population into working with it in continuing ultimate Israeli control over the West Bank,” says the International Crisis Group’s Blecher. The message is clear: Opting out of the peace process is not an option, should Palestinians wish to keep their jobs and the minimal degree of self-governance they have achieved.

The Palestinian hope of replacing occupation with sovereignty remains a distant one. Since 1993, behind the curtain of peace talks, their land has been eroded, their economy has been taken hostage and their democratic rights have been sacrificed for security.

“At the end of the day there needs to be [a negotiation],” says Blecher. “[But] there is a fundamental problem with the balance of power. Israel is too strong. The Palestinians are too weak. And the U.S. is on Israel’s side when it matters. And the Europeans are feckless. That balance must change in order for anything productive to happen.”

The Occupied Territories are – relatively – ‘peaceful.’ But there is no peace. Palestinians have villas and SUVs, but little industry, while the PA has less and less land to look forward to should negotiations ever produce an autonomous state.

“For Palestinians, this was not about a feel-good process, where everyone hugs and kisses and feels peaceful sentiments,” Blecher says. “It’s ‘End the damn occupation. Get off our land. Get out of our country.’”