Sometime in September the United Nations General Assembly will vote (in all probability) in favor of Palestinian statehood. How the vote will be taken and what its significance for the relationship between infant Palestine and the rest of the world and for the day-to-day management of Israel’s occupation is anyone’s guess.

In a perversely proactive way, the Netanyahu government is already addressing this threat with its typical mélange of hysteria and confusion. On the one hand, it has done little to convince the Palestinians or anyone else it wants a negotiated peace, thus making the case for the Palestinians to make a unilateral bid for statehood.

On the other, it threatens the Palestinians against taking unilateral action, saying it will undermine the principle of a negotiated solution. Netanyahu’s ultimate goal is to do nothing and let nothing happen because the Netanyahu’s government’s raison d’être is nothing but être. Thus, between American pressure to negotiate and the resistance of the great majority of his cabinet to concede anything that would make talks possible, his solution of to offer maybe a Bar-Ilan II speech here, maybe a symbolic redeployment of troops there, but nothing that would upset the coalition with a real peace process.

In contrast, the Palestinian Authority is conducting its independence drive in way that would do Harvard Business School proud and might even show the Israeli government a thing or two about longterm planning. The statehood campaign was mapped out two years ago. The PA defined its goals, has executed its strategy and has won external recognition for its achievements from such bodies as the International Monetary Fund. Compare the era of Yasser Arafat with a recent speech by Prime Minister Salam Fayyad.

There was nothing about victory marches till the flag flies over Jerusalem. Rather, he lauded the work of the Palestinian Central Bureau of Statistics.

THE PALESTINIAN public is by all accounts less enthused by independence than its leaders. A poll taken by Palestinian Center for Policy and Survey Research last month found that just over 40 percent thought independence would lead to no significant change. Those who thought it would change things for the better were outnumbered by those who thought its impact would be negative 22% to 27%.

The Palestinian statehood drive has the aura of the European transition to a single market and single currency in the 1990s – a revolution conceived and undertaken by bureaucrats and politicians over the heads of an indifferent people. When Palestinians go out and demonstrate these days, it’s for Fatah-Hamas unity – not for statehood.

So who has the best handle on the significance of Palestinians independence? In a certain sense all three sides do.

Eighteen years after Arafat and Yitzhak Rabin shook hands at the White House, the Palestinians are finally getting their state – not through a war of liberation as Arafat hoped, or through negotiations as Rabin and Bill Clinton had expected, and certainly not because the General Assembly wills it. The state is emerging slowly and uneventfully because the Palestinian Health Ministry now delivers medical services, the Finance Ministry decides spending priorities and allocates money according to established systems, and the security services preserve law and order rather than aiding and abetting terrorism. Foreign financial assistance is reaching ordinary people instead of Swiss bank accounts.

Palestine is far from being a Denmark or a Singapore. Corruption is still widespread.

Human rights are observed reasonably well by the low bar of the Middle East, but they are far from what they could or should be. Strictly speaking, the government of Mahmoud Abbas and Salam Fayyad is not even legally entitled to be in office. The economy is far too reliant on international aid rather than the productive labor of Palestinians. But given the circumstances – the occupation, the split with Hamas and an uncertain political future – the Abbas-Fayyad team has done a creditable job. They have taken the correct course and are being rewarded.

UN backing of statehood will have surprisingly little effect on the progress of this state in the making. There may be some celebrations after the General Assembly vote, but the next morning nothing will have changed – the roadblocks, the settlements, the split between Fatah and Hamas. In that respect, the Palestinian street may be wiser than either its leadership or Israel’s.

THE HYSTERIA of the Netanyahu government is correct, too. The fact is Palestine – at least the West Bank part of it – is becoming a member of the community of nations. The argument that there is no one to talk to and that a Palestinian state is an existential security threat ring increasingly hollow against the evidence.

Unlike the Oslo generation of Palestinian leaders, the current one is not simply declaring its desire for peace. It is building the institutions and values of a functioning state. The drive for Palestinian statehood doesn’t preclude a negotiated settlement, but it certainly backs Israel into a corner, hemmed in by out-of-date and irrelevant excuses.

There’s no small irony here. As the rest of the Middle East is in the throes of a revolutionary drama of mass protests, social networking and gunfire, a team of suits in Palestine are quietly and methodically getting the job of reform done. It’s Israel’s opportunity to seize.

The writer is executive business editor at The Media Line. His book Israel: The Knowledge Economy and Its Costs will be published by Palgrave Macmillan in 2012.