Hopelessness and lack of a political horizon seem to have made the Palestinian Authority (PA) more assertive, even proactive.

After years of marking time while negotiations with Israel went nowhere and Israeli colonisation proceeded apace, Ramallah is beginning to stir. One of the engines driving movement is the plan of Prime Minister Salam Fayyad to build the infrastructure of a state and then unilaterally proclaim the state in August 2011.

It is interesting that there is now discussion of reviving the Palestinian pound, one of the key elements of statehood, independence and sovereignty. The restoration of the Palestine pound, once on a par with the British pound, would amount to a declaration of monetary and financial independence from Israel, which has held the Palestinian economy captive - along with the land - since the occupation in 1967.

Talk of a national currency coincides with the belated imposition of a ban on Palestinians working in Israeli settlements in the West Bank and East Jerusalem, and a boycott of Israeli settlement produce, goods and services.

The PA is calling for $50 million for the national "Dignity Fund" established to pay half salaries for half a year to Palestinian workers who quit their settlement jobs and take up employment in the Palestinian private sector. The money would be channelled through employers and would encourage them to take on more workers, expand their businesses, and grow the small, weak Palestinian economy.

The time is right to impose this ban because the Palestinian construction sector is booming and can absorb labourers who left jobs in the settlements.

Initially, the workers resisted the idea of leaving their relatively well-paid jobs in the settlements. They argued that they would not get the same salaries working in the Palestinian private sector. Many of the 20,000 workers, particularly the 6,000 women, prefer to take menial jobs in the settlements rather than in their own communities. They have been given till the end of the year to comply with the ban or face heavy fines, or even imprisonment.

The ban amounts to a breakthrough in the thinking of Palestinian policy makers who are, at long last, preparing for the day when Palestine will separate from Israel - if ever it does.

Israel has long pursued a policy of "separation" - translated into South African terms, apartheid. This has been manifested in the construction of the West Bank wall, the denial of free movement to Palestinians, the cutting off of occupied East Jerusalem from the West Bank hinterland, the imposition of a pass regime and the isolation of Gaza from the West Bank.

The PA took its time to react to Israel's "separation" policies because it did not wish to upset the negotiations applecart. Unfortunately, the PA discovered - almost too late - that the cart (the peace process) was rickety and there were no apples (benefits) to be had.

Fortunately, private individuals and groups took matters into their own hands. Some declared unofficial boycotts of not only settlement products but also Israeli goods. In 2000, during the opening weeks of the second Intifada, a group of Palestinian individuals formed a movement to promote a boycott of settlement goods. One of its founders, Salah Haniyeh, observed: "We were not connected with the PA and worked with the grassroots. While the PA did not stop us or support our campaign, we did not have the legitimacy to go to shops to ask them to stop stocking settlement products. This depended on the owners of factories and shops. They had to stop accepting settlement goods and start stocking Palestinian products. We made an awareness campaign through students and women."

He noted that women were particularly important because they decide what to buy for the home and family. The boycott succeeded in removing from the Palestinian market some soft drinks and bottled water originating in settlements.

At the end of last year, the government decided to join the boycott campaign. Thousands of volunteers wearing T-shirts bearing the slogan "Don't let settlements into your home" circulated in Palestinian towns and villages and handed out an 88-page guide listing settlement goods, services and manufacturers to be boycotted and giving instruction on how to participate. Palestinians are asked to sign the "karama", or "dignity", pledge to replace settlement products with local ones.

On April 26, President Mahmoud Abbas signed a law for the boycott of settlement products and it was promptly enforced. Lorries carrying asphalt and cement from settlements to the West Bank were turned away. The Ministry of Public Housing announced it would not use settlement materials in projects. Fruits and vegetables being sold in the West Bank were seized and burned or trashed. At least one settlement-based factory closed.

In tandem with the boycott, a consumers' protection society was established to oversee quality control and pricing of Palestinian products.

"This is very important. In 1987, during the first Intifada, we boycotted Israeli goods. Palestinian factories opened but after six months we saw that the products were not good quality and prices were high. Now we have institutions for standards and a hot line to the consumer protection society," stated Haniyeh.

He made the point that a boycott of settler goods and a ban on settlement employment does not violate the 1996 Paris protocol, which governs freedom of movement and trade in the occupied territories, or international law, which regards settlements as being illegal.

"We are beginning a popular battle, like the campaigns waged by Gandhi for Indian independence. The situation here is changing. The protests every Friday against the settlements and walls in the West Bank village of Bil'in have inspired 20 villages to join in. A small village can change the world."