Bashar Masri is trying to to calm the panic. "I'm not interested in Israeli real estate or any Israeli company, not in Tel Aviv and not in Netanya," he stresses, "but in a residential project in Jabel Mukaber, a Palestinian neighborhood in east Jerusalem. I'm not a politician but a national Palestinian businessman who knows his work, and if my business serves my people – I feel better."

In his Ramallah office, a villa near the famous Mukataa compound, he tries to explain to all the dissenting voices: There is no reason to be concerned. This is not a story of Palestinian money taking over the Israeli economy.

And yet, there is a story here. A story mixing money and politics; motivations of the new Palestinians and the escalation within the Right; a purely financial interest and a national struggle. Masri – a millionaire, Palestinian businessman and an American citizen – has been trying to purchase the majority shares in Digal, a real estate company traded in the Tel Aviv Stock Exchange whose prize project is an upscale residential area in Jerusalem called Nof Zion.

Digal owners Yehuda Levy and Meir Shamir, posed no objection. The company has a NIS 140 million ($39.61 million) debt. Most of the shareholders were also favorable. But Nof Zion is a project situated in the heart of Palestinian neighborhood Jabel Mukaber in east Jerusalem, and as if that wasn't enough, the brother of Jerusalem Mayor Nir Barkat is also indirectly linked to the company.

The proposed deal has prompted the opposition of right-wing elements who are pressuring the relevant parties into preventing the deal from going through and working on an alternative purchase offer. Meanwhile, Digal's share lost more than 80% of its value in the past year.

Masri seems surprised by the Israeli response to his bid. "I wish to purchase a commercial body but the deal is being plagued by threats and blackmailing," he says angrily. "If in this case the politics of national-religious zealots mars the deal it shall be a shameful blow to the Israeli liberal economy. Israeli businessmen come to me time and time again seeking help in entering the Palestinian market and the Arab world. How can I help them when Israelis succumb to bigots and zealots who don't want me because I'm a Palestinian?"

Masri, 50, is a well-dressed, well-spoken man who is both fluent in English and Arabic, but not Hebrew. He is the son of a wealthy Palestinian family from Nablus. His grandfather was the Jordanian parliament speaker and other relatives served as Nablus mayors. It's one of the wealthiest families in the Palestinian Authority. Bashar himself made his own fortune in the real estate, media and financial business, both in the PA and in Arab states.

Purchasing Digal is meant to be his first foray into the Israeli market. "Some two years ago I heard about a company building a project in Jabel Mukaber that had fallen into debt and was looking for investors," he relates. "They were planning on building some 400 luxury flats and built 90 units at the first stage but had trouble selling them. They could not find an Israeli investor as the project was in the heart of a big Arab neighborhood – such a location is prone to trouble, especially if the project is aimed at the national-religious public."

Masri followed the reports and saw an opportunity. "He's interested in the real estate aspect, he's not a political person," says an Israeli associated with Masri. "He saw a nice plot the Jews were having trouble with and realized he should buy it." Masri appointed Dov Weissglass, former director of the Prime Minister's Office during the Sharon administration, as his representative and an offer was made to Digal. The two first began working together 15 years ago when Masri was looking for investment opportunities in Israel.

In early December 2010, Digal's shareholders chose Weissglass's offer as the best one. It is unclear whether they were aware that the Palestinian businessman was behind the offer at this stage. Weissglass presented the offer as a Cypriot company's bid and according to Attorney Moti Minser, who represents several of the shareholders and Nof Zion residents, "he had concealed the identity of the person behind the mysterious company." Masri claims that the company is listed in Cyprus for tax reasons and that his identity was not withheld at any point.

As far as the institutional investors are concerned, Masri's identity is not an issue. "He's a frequent visitor at President Peres's house," a source in the Israeli market says. "He a Palestinian businessman without an Israel complex, he's welcome here." Meir Shamir, who owns 35% of Digal also has no objections.

Obstacles on the way

However, two main obstacles stand in the way of the deal being fulfilled. One is Digal co-owner Yehuda Levy who serves as the company's CEO and the other, more prominent obstacle are right-wing elements and Nof Zion residents.

Ninety-one apartments have already been built in Nof Zion and most have been sold. Several dozen residents who fanaticized about a Jewish neighborhood with synagogues and a security fence are now fighting to prevent the deal from going through. Some have even bought Digal stock to impede the purchase. The residents claimed that they face damages worth NIS 100 million (about $28 million). But it's not just about the money. "Instead of having our own shopping center I will have to buy things at the Arab stores. It's not a fight over shares but over land and character," Attorney Minser says.

Also joining the campaign is religious real estate group B'Emunah, which is calling for a boycott of Bank Leumi, one of Digal's investors. A Digal shareholders meeting held in late December was attended by residents who harshly oppose the deal. During the heated debate some called Masri a terrorist and an enemy of Israel. "He has been arrested many times; his contacts with Palestinian Authority senior officials are well known and it is suspected that some of them are linked to terrorism," Minser said.

Masri does not hide the fact that he was arrested and had spent time in jail as a teen several times. "In 1978, when I was about 15, my friends from school and I started attending anti-settlement demonstrations. I think it was in Kedumim. I was arrested time and time again, for short periods of time. It finally ended when my parents decided to send me to Cairo to complete my studies."

From Cairo to Washington

His time in Cairo kept Masri away from the PA for a long period. When he graduated from high school he joined his parents who were living in Virginia and started studying Chemical Engineering at Virginia Tech.

He then traveled to Saudi Arabia, spent a couple of years in London and later moved to Washington, where he worked for a small consulting company. He married an American woman, Jane, obtained US citizenship and became a father of two daughters, Tamara and Dina. The couple traveled to Israel while Jane was pregnant with Tamara but were refused entry as it was claimed Masri posed a security risk. The US made a diplomatic appeal to Israel on the matter.

In Washington he turned to business and started reconnecting to the Palestinian territories and politics. He held contact with Saeb Erekat and Hanan Ashrawi at one point. "Journalist Akram Haniyeh, who was one of the organizers of the first intifada and a close friend of mine, came to Washington and I visited him in Tunisia where he served as Arafat's advisor," Masri says.

"What drew me to the Palestinian economy was that it was based on small businesses, almost always family businesses which are unable to create ties with international companies," he explains. "It's a hindrance that prevents the Palestinian economy from moving forward and that is why, when I came here, I started setting up investment companies and technological companies together with partners and friends," he says.

One of his first orders of the day was founding the Al-Ayyam daily, which has the second largest circulation in the Palestinian territories and is considered affiliated with the Palestinian establishment. He also established a holdings company and a technological group which provides outsourcing services to Israeli companies.

"That was in 1996 through to 2000, but then came the (second) intifada and everything stopped. I turned to business overseas – a little in the Gulf, Jordan, Egypt but mainly in Morocco where I'm building housing units. I have an American passport so I can easily conduct business abroad, and I enter Israel on a tourist visa." There were some setbacks on the way though. In Gaza, for instance, he tried building an agriculture export company, but the export ban has suspended its activity.

'We get help from Israel'

Masri's biggest project in the Palestinian territories is Rawabi, a new city he's building between Ramallah and Nablus with the help of Qatari funds. "It’s a modern, one of a kind residential project in the West Bank which will ultimately include 5,000 units and 40,000 residents." Work is underway, demand is high and Masri is optimistic about the project's success and about providing Palestinians with work opportunities.

"Like all Palestinian businesses, I have to get help from Israel. We use Israeli raw materials like gas, cement, electricity, and that has led me to make many acquaintances."

The collaboration with Israel has created another problem for Masri. Work on Rawabi is being performed as part of the boycott of settlement goods and Masri makes a point of not working with Israeli companies that manufacture products in settlements. In response, 48 Knesset members signed a letter to the government earlier this week demanding that Israeli firms taking part in the construction in Rawabi be boycotted. But Masri continues to stress that his interests lie only in the PA: "Despite my many connections in Israel I have no interest in buying and investing in Israel – only Palestine."

The Nof Zion project was initially meant to attract wealthy foreign residents, but demand proved low, not helped by the fact that two terrorists were reported to have been from Jabel Mukaber. Digal then started selling apartments to the national-religious public but then came financial problems. A visit in the area reveals a beautiful if somewhat deserted compound.

Masri does not want to change the area's character. His plan, should the deal come through, is to build the remaining 300 apartments and sell them to Arabs from a medium-high socio-economic level while separating the Jewish and Arab sides. He does not intend to interrupt the lives of the Jewish residents. "I'm not engaged in charity here, only business," he stresses. "I'm not interested in the land as such, unless one can build on it and develop it. What attracts me is that the project already has building permits. Everyone in Israel knows the difficulties in getting such permits and when it involves Arab-Israelis it's virtually impossible."

Those opposed to the deal are planning to submit a bid by a "wealthy, foreign Jewish businessman who is willing to buy the entire project," Minser says. There are also rumors of another bid by French-Israeli businessman Shmuel Flatto-Sharon.

All the talk about fear of "Arab money" taking over Israeli projects finds Masri annoyed. "What Arab money?! I wish rich Arabs from the oil states would give me money to develop the Palestinian economy. We may have Qatari partnerships in Rawabi, but we're always trying to get Arabs to invest here and there is virtually zero response. And this is just for Palestinian investments, not in Israel. Jabel Mukaber, like all of east Jerusalem, is part of Palestine."

Meanwhile, Masri is hoping that financial interests decide the fate of the deal and that politics are left at the door. "I was told that during a debate last week a religious law expert spoke in favor of the deal as people shouted at him: 'Be ashamed of yourself, take off your yarmulke, you're not Jewish!' I have no interest dealing with such people, all I'm interested in is business and the financial development of Palestine – not Israel," Masri says.

Amir Kurtz contributed to this report