Children's chairs pulled out of a pile of rubble are all that's left of a schoolhouse that served 17 children of Palestinian herders in this encampment on a wind-swept West Bank plateau.

The school was razed by Israeli troops last week for the third time in six years as Israel asserted control over the area — part of the 62 percent of the West Bank that remains exclusively in Israeli hands, much of it set aside for Jewish settlements and military zones. The rest — where most Palestinians live — are disconnected territorial islands administered by the Palestinian Authority.

The Palestinians and many in the international community say this arrangement, dating back to the 1990s and always intended as temporary, is getting in the way of building a Palestinian state from the ground up.

Prime Minister Salam Fayyad says he needs to extend his reach to more of the West Bank as part of his internationally-backed plan to get the Palestinians ready for statehood by fall. The Palestinian timeframe coincides with President Barack Obama's goal to broker an Israeli-Palestinian deal on statehood by September.

With negotiations stuck, however, close attention is being paid to Fayyad's efforts and Israel's continued control of large tracts of the West Bank, which would form the bulk of a future Palestinian state.

Any development in this part of the West Bank — from building the three-room school in Khirbet Tana to paving roads or extending electricity lines — requires Israeli approval which Palestinians and international aid officials say is often either slow to be granted or not given.

The U.N.'s Mideast envoy, Robert Serry, this week told the U.N. Security Council that "Israel needs to roll back measures of occupation as the Palestinian Authority rolls out the basis for statehood."

It's also a money issue. Donor countries support Fayyad's efforts with hundreds of millions of dollars a year. They hope that Palestinians will gradually need less foreign aid if the West Bank economy keeps growing as it has — an annual pace in the first half of 2010 of almost 10 percent, largely due to increased donor support.

But that growth rate can only be sustained if the Palestinians can have better access to markets and can expand into the Israeli-controlled parts of the West Bank, known as Area C, said Christian Berger, the EU representative in the Palestinian territories.

"Israel will need to be more forthcoming when it comes to the approval of projects" in Area C, Berger said. Israel "should also think of handing over parts of Area C to the Palestinian Authority in order to allow better use for economic activities," he added.

"Ultimately, it would save the donors a lot of money," Berger said. Europe gives the Palestinians euro1 billion ($1.3 billion) a year.

Israel says it supports the Palestinian nation-building efforts and has been easing restrictions on Palestinian trade and movement.

"We are open and willing to move forward on a range of issues, which will allow for the creation of a more viable infrastructure," said government spokesman Mark Regev.

Regev did not give specifics. The Israeli military says it has authorized dozens of international projects in Area C in recent years, including the paving of roads and a sewage treatment plant.

Aid officials say approval for some projects has taken years. Military officials say they're doing their best to speed up the process.

The Palestinians say Israel has routinely stifled Palestinian development in Area C, while fostering the expansion of more than 120 settlements there, now home to nearly 300,000 Israelis.

The division of the West Bank into zones — A is under full and B under partial Palestinian control — was part of an interim peace deal from 1995. Palestinians were to administer the areas with the largest number of Palestinian residents, while Israel would retain full control over Israeli settlements and rural areas.

It was to last at most until 1999, the target for a final peace deal. But negotiations failed.

Today, about 150,000 Palestinians live in Area C ,or 6.5 percent of the West Bank's 2.3 million Palestinians.

In practice, Palestinians can build only in 1 percent of Area C, the U.N. says. Some 70 percent is set aside for Israeli settlements and military zones, among other things, and Palestinians face restrictions in the remaining lands.

Israel says it has been authorizing more master plans for villages in Area C, but critics say that mostly covers already built-up areas.

Palestinians building outside those areas risk demolition.

In the past 13 years, nearly 2,800 Palestinian-owned homes, shacks and animal shelters were torn down, the U.N. says. In 2010 alone, 339 structures were razed, displacing just over 450 people, half of them children, according to the U.N.

Khirbet Tana, the herders' encampment east of the Palestinian city of Nablus, was razed last week because it's in what Israel defines as a military training zone, with potential risk to life.

One-third of Area C is designated as a military zone, the U.N. says.

The Israeli military says Israel's Supreme Court rejected an appeal against the demolition of Khirbet Tana in 2008.

The camp is home to about 40 Palestinian families who live there in shacks and tents in the winter and spring to graze their sheep and goats, a tradition they say goes back generations.

The herders' older children attend school in a village several miles away, while those in grades one through four have been studying at a small school built in 2003. The school, along with the rest of the camp, has been leveled three times so far, most recently last week, though residents said they hope to rebuild with the help of an Italian aid group.

Two days after the last demolition, the structure was reduced to a jumble of broken cinder blocks. Tiny chairs had been pulled from the rubble. A blackboard still bore a teacher's message from before the summer break: "See you next school year, God willing."

Ramesh Rajasingham, head of the U.N. Office for the Coordination of Humanitarian Affairs in the Palestinian territories, said the demolition of the school was an "unconscionable" violation of the basic right to education.

Villagers must have been frustrated, he said, to see nearby Jewish settlements expanding while "even their makeshift shelters are being demolished."