It might be tempting to dismiss as diplomatic bluster the statement by Saeb Erekat, chief negotiator for the Palestinians, that the Palestinian Liberation Organisation would declare statehood unilaterally in the near future. Certainly it would not be a novel analysis given how rife the peace process is with grandstanding and brinkmanship on both sides. The PLO tried it twice before under Yasser Arafat, who backed down both times in return for concessions and reassurances. But this time is different. To disregard Mr Erekat’s statements would be to underestimate both the Palestinians’ disillusionment with the peace process and their determination to establish a Palestinian state.

It is hard to measure how far prospects for peace have receded since Barack Obama took office. Where once he was feted for his speech in Cairo, his promise of change, his seeming understanding of the intricacies of the peace process and his willingness to pressure the Israelis into tough concessions, now his failure to achieve a settlement freeze has made the peace process appear pointless and put the Palestinian leadership in an untenable position. They want peace and a Palestinian state, but both require concessions from Israel to be accomplished.

Thus far, the Israelis are angrily dismissive of Mr Erekat’s threat. Some are calling for some form of retribution, either by annexing the settlements or withholding funds that Israel collects on the PA’s behalf. But they are merely proving the Palestinians’ point: if Israel can punish them as one might an errant child, then the peace process is truly a farce. Other Israelis seem to think it is merely a poor joke. The Palestinians declared independence once before in 1988, and nothing much came of that, so why worry now? So long as its ever loyal ally, the US, has a seat on the UN Security Council, so their thinking goes, Israel is shielded from the worst of international scrutiny and condemnation. But the Palestinians may be about to present Mr Obama with an interesting conundrum. If they make good on their threat, the US will have a choice: exercise its influence and Security Council veto to block their entry to the UN; vote in favour; or abstain from voting. The first would all but kill Palestinian national hopes for the foreseeable future, while the last two would risk angering a largely pro-Israel American public. But the Palestinians are not simply asking Mr Obama to choose between justice and his political career; that would be foolish. They are offering an alternative to the stagnant peace process that bypasses Israel’s intransigence, and it is a tempting offer.

Too little attention has been paid to the progress being made in the West Bank. Its security forces are rapidly reaching the point where they can be trusted to police the Territories. The functioning of its economy remains tied to the goodwill of the international community, but it is slowly opening up and developing. Opportunities are being created that promise a brighter future to Palestinian young people. In short, it is slowly becoming a functioning state in all but name. The more progress is made, the harder it is to deny international recognition.

Today, it is easy to dismiss the declarations of Mr Erekat and his fellows. But if in two years all the pieces for a functioning state are in place, as they plan, it will be much harder, if not impossible, to do so. In the end, real peace will need Israeli co-operation, but shifting an intransigent Israel requires leverage. The Palestinians may have found it at last.