It's boom time in the West Bank – the right kind of boom this time. Weeks ago, you couldn't flick on an Israeli TV or radio channel without hearing the good news. Parts of the international press did the same, with a flurry of articles pronouncing the West Bank open for business.

The boost in financial fortunes is attributed to Israel easing up on some checkpoints, the Palestinian Authority (PA) police tackling city street crime and the Israeli government's promotion of something called economic peace.

Things have materially improved in the West Bank. Israel has stopped operating some previously snarled-up checkpoints inside the occupied Palestinian territories. And where people can move more freely, commerce can, too. Store-keepers in Nablus, for instance, speak of increased trade now that the checkpoints at every entrance to the city have been lifted.

Many attribute the change not just to the checkpoints, but also to the Palestinian police. Recently empowered actually to do their job (partially – they are still barred from night patrols) the West Bank's municipal police forces have tackled the kind of crime that once kept shops shuttered up and shoppers at home.

But none of that means that the West Bank economy is suddenly taking off, as some of those commentators would imply.

I met the CEO of the Nablus-based Palestinian Securities Exchange, for his view on the subject. With a Master's degree from St Andrews University and a background in British and French banks, Ahmad Aweidah is a classic free-market advocate (we spent a practically mandatory few minutes politely disagreeing over Thatcherism).

He says the PSE has 38 listed Palestinian companies that are in good shape – ranging from PalTel, the Palestinian telecommunications firm, to Aziza, the chicken company. But across all sectors including banking, services and industry, these businesses are stunted to about 20% of their actual capacity.

"The biggest impediment to Palestine's economic growth and human development is the occupation and the settlements – and all the policies that are byproducts of that," says Aweidah.

One such policy is threatening to scupper a $700m deal between the Palestinian Authority and the Kuwaiti mobile phone operator Wataniya. This contract for a second Palestinian mobile phone network is expected to create about 2,500 jobs in the West Bank, but has stalled because Israel won't release the promised frequencies. Now the frustrated Kuwaitis have given the PA an ultimatum: sort it out or we'll pull out.

Another policy – premised on Israel's security requirements – means that the much-trumpeted West Bank industrial zones don't stand a chance of getting off the ground. These ventures, part of a project from Middle East envoy Tony Blair, are slated for Jenin, Jericho and Hebron. But potential investors need to be assured that their raw materials and finished goods would have free passage in and out of the West Bank – something that Israel will not guarantee.

Aweidah reports that plans to build a Palestinian power plant in the West Bank face a similar fate, because the proposed site is in an area for which a string of Israeli permits are required and so far they have not been forthcoming. Another obstacle in the way of those otherwise healthy Palestinian companies is that some of their CEOs and investors – dual-citizenship Palestinians – have their entry into the West Bank impeded by Israel.

West Bank business is to some extent reliant on the capital and human resources of overseas Palestinians, so that such measures represent a significant blow.

The list goes on. As a consequence of being occupied, the Palestinian territories are a captive market for Israeli goods. Trade agreements give Israeli businesses preferential status, so Palestinians are often compelled to purchase materials from Israel rather than from another, cheaper source. And with the Gaza Strip now entirely severed from the West Bank, Palestinian companies are trading with a third of their market missing.

Piece these together and the picture is not so much of resurgence as of an economy that gets thwarted at every turn. That's one reason why many Palestinians aren't buying the fanfare declarations over finances. "You can't separate economic peace from political peace," says Aweidah, one of countless voices articulating the same thing.

It's not just the aspiration for independence and statehood that informs this statement. It's the obvious fact that people can't grow their own economy while an external force is pulling the strings. Until Palestinians are free to make their own decisions, cheery economic signals, while appreciated, tend to be viewed wearily as a case of Israel rewarding the West Bank populace with a few extra rations, for good behaviour.