Israeli Prime Minister Benjamin Netanyahu has long tried to substitute the slogan of “economic peace” for genuine progress with the Palestinians on the political front.

Yet the International Monetary Fund’s projected growth of 7 percent in the West Bank for 2009 is largely the result of Palestinian reforms undertaken in spite of the obstacles Israel continues to place in the way of Palestinian development.

Too many in the West remain unaware of the impediments to economic development — not to mention political freedom — we Palestinians continue to face.

Some Israeli checkpoints have been dismantled, but any Palestinian businessman will tell you that with over 600 checkpoints and roadblocks still scattered across the West Bank, we remain in a tenuous economic position.

Few domestic or foreign investors are willing to invest in the Palestinian economy, and many Palestinian businessmen holding passports of friendly countries, even the United States, are being denied passage through Israel.

The economy of the West Bank has deteriorated over the past decade as a result of Israeli restrictions on Palestinian movement, which severely hamper trade and labor mobility.

These restrictions, combined with Israel’s fragmentation of the West Bank, remain the greatest impediment to economic development in Palestine. This includes Israel’s forced isolation of occupied East Jerusalem, long the economic heart of Palestine, from the rest of the West Bank.

According to a June 2009 World Bank report, real G.D.P. in the occupied Palestinian territory has declined by a “cumulative 34 percent in real per capita terms” since September 2000. Given this, even the most minimal Israeli gestures cannot help but bring improvement.

The I.M.F.’s projected growth, however, will be a one-off (as was growth in 2006) if Israel fails to improve the prospects for Palestinian trade and development.

As Oussama Kanaan, the I.M.F. chief of mission in the West Bank and Gaza, stated, “If the relaxation of Israeli restrictions does not continue in the remainder of the year, real G.D.P. per capita would decline further in 2009, along the same trend started in 2006.”

Palestinian Prime Minister Salam Fayyad made a similar point when he asserted, “The Israeli restrictions still pose obstacles to the improvement of the economy.” In other words, 7 percent growth is no sure thing.

In any case, Palestinian economic growth is not a substitute for serious and meaningful negotiations aimed at ending Israel’s occupation and establishing an independent, viable and sovereign Palestinian state.

I am all for economic improvement, but not as a substitute for peace — nor its manipulation by Mr. Netanyahu to manage and normalize the occupation while trying to sell Israel’s benevolence to the rest of the globe. Self-determination and statehood alone hold the keys to unlocking Palestine’s economic potential.

I monitor Mr. Netanyahu’s economic and political intentions closely because in 1995 I left a comfortable life on Park Avenue in Manhattan to become the founder and chief executive of the Palestinian National Beverage Co.

Initially, the undertaking thrived. We continue to employ over 300 Palestinians, but we have struggled in recent years as a consequence of Israeli restrictions. Mr. Netanyahu’s economic and political dictums determine whether we grow or contract. He wields this immense power over us, although Palestinians in the West Bank and Gaza had no role in his election.

The foundation upon which our economy rests is dangerously rotten. Israeli spreading settlements, checkpoints and roadblocks that fragment the occupied Palestinian territory; Israel’s illegal Wall and its permit system that severely restrict where Palestinians can live and work; and Israel’s continuing siege of Gaza all not only threaten our nascent economic recovery, but threaten the very possibility of a two-state solution.

The alternatives to a two-state solution are either an apartheid state, which is unacceptable to Palestinians, or one binational state, which Israeli Jews reject.

Mr. Netanyahu is selling us a bill of goods with the claim he can manage the situation with economic improvement. He is wrong. Without a political outcome that secures Palestinian territorial rights, including East Jerusalem as the Palestinian capital, and a just outcome for refugees, more conflict lies ahead.

President Obama recognizes this. President Mahmoud Abbas recognizes this. Yet Mr. Netanyahu somehow thinks he can charm Palestinians, who are daily reminded of the occupation under which they suffer, with a 7-percent growth bubble.

If President Obama wants to be a real friend to Israelis and Palestinians, he must insist that Israel stop settling Palestinian land in the West Bank, including East Jerusalem, and abide by international law.

A settlement freeze is a crucial first step to salvaging the two-state solution, as well as Israel’s credentials as a genuine partner for peace. Seven-percent growth and an illusionary calm are no substitute for this.