As President Obama seeks to jumpstart the Middle East peace process with increasingly disappointing results, a new approach has begun to emerge from within the upper circles of the Palestinian Authority.

In essence, this approach puts "statehood first" – without waiting for negotiations to resume, or for a full final status agreement with Israel. From this point of view, and in a kind of Zionism in reverse, unilateral actions on the ground can lay the foundations for an independent Palestinian state, irrespective of Israel's demands or strategy.

This approach has recently been formalised in the PA government's two-year plan, which includes an ambitious range of economic and developmental projects and is intended to tally with the growing international consensus on setting a two-year time frame for the two-state vision and a comprehensive Palestinian-Israeli settlement.

"Statehood first" has a superficially attractive ring to it that has begun to gain some traction among decision-makers in Washington and the EU. But it is fundamentally flawed. The first problem is the assumption that unilateral Palestinian state-building is possible when every PA action is determined by the Israeli occupation. Even putting to one side the Fatah-Hamas split, the PA cannot exercise the most elementary of powers; it cannot independently trade on the world market, decide who can enter its soil or deploy the smallest unit of its security services from one village to another; its leaders cannot even move without prior Israeli consent. In short, it cannot freely exercise its authority over its citizens or territory in any meaningful manner.

At the heart of the PA's programme lies a basic contradiction: while it claims to be building a state against the occupation, it is in practice building state-like structures with the occupation. No genuinely sovereign state has been or can be built while still under occupation, and nothing in Israel's current stance on the basic issues of Palestinian sovereignty (territorial extent, control over borders, the right to self defence, and so on) suggests otherwise.

The second problem stems from a total misreading of history. The Zionist movement may indeed have developed its state-building capacity while under the British mandate, but Israel only came into being as a state by using force against British and Palestinians alike. By way of contrast, the only military capability the PA is building under US supervision is directed against those who seek to take up arms against the occupation. The "Zionist" option of military self-reliance and readiness to use force for political-territorial ends is totally absent from the PA's new approach and is inimical to its political outlook.

The state-first approach carries other significant risks: it threatens to transform any final status negotiations into a prolonged state-to-state dispute whereby the fate of Palestinian refugees, the future of Arab Jerusalem and other critical issues will be indefinitely deferred. The urgency of dealing with Palestinians' national grievances as a whole will diminish, and their interests will be gradually pushed to the margins of international and regional concerns on the grounds that they have already fulfilled their major aspiration by being granted statehood.

In present and foreseeable circumstances, the PA's programme will be concentrated on the West Bank alone. This will only aggravate the division of the Gaza Strip from the Palestinian hinterland. It will generate new Fatah-Hamas frictions, making it harder for a unified position to emerge. It is also worth remembering that the current PA cabinet is a caretaker government twice over, and has no mandate for any two-year programmes. Moreover, the issue of Palestinian statehood lies outside its legal remit: it is a political decision that rightfully belongs to the Palestine Liberation Organisation, not to the Palestinian Authority. Yet if it proceeds with its programme regardless, the PA will find itself caught in a political trap – success will undermine its claim for more land and greater territorial viability in the final status negotiations; failure will simply demonstrate that the Palestinians are unworthy of statehood.

Palestinian unilateralism will open the door to legitimising Israel's own unilateralism, and both historical precedent and the balance of power suggest that in such a contest Israel will prevail. Rather than lay the foundations for a truly viable and sovereign Palestinian state with Jerusalem as its capital, Palestinian "Zionism" as conceived is only likely to produce a partial, ersatz entity; one that differs little from the autonomous self-rule that has long been Israel's remedy for addressing the Palestinian problem.

The new PA approach is not really about building a state by stealth or undoing the occupation by other means. Its focus is apolitical: improving Palestinian living standards and fomenting state-like behaviour but without any of the advantages of a real state. Indeed, this approach dovetails all too neatly with Bibi Netanyahu's notion of "economic peace" – it appears as a pragmatic ambition, to supplement the peace process and path to a viable two-state solution. In reality it is destined to circumvent it altogether – or, at best, to ensure that the outcome is determined by Israeli national interests alone.

The first essential duty of a state is defending its citizens against foreign incursions and threats. This part of the citizen-state contract clearly cannot be fulfilled under the proposed plan. The net result may be to devalue the already unconvincing currency of a two-state solution and leave the Palestinians suspended in yet another twilight zone whose only real dimension is a return to the heady days of "benign" occupation.