The main issue before the United Nations General Assembly this week is the Palestinian quest for recognition. Less attention is being paid to a related, and no less important question: Are the Palestinians capable and ready to run a state?

That question has been the focus of the Ad Hoc Liaison Committee, the donor support group to the Palestinian Authority, which is chaired by Norway. The committee is the only forum in which both the Palestinian Authority and the government of Israel are members, together with regional partners, the European Union, the United Nations, the United States, Russia and a dozen key donors.

The committee’s method has been to work closely with the Palestinian prime minister, Salam Fayyad, to support his plan to reform the Palestinian economy and Palestinian institutions with a view to preparing them for statehood.

An integral part of our method has been to monitor progress by exposing Palestinian performance to scrutiny by the World Bank, the International Monetary Fund and the United Nations.

Prime Minister Fayyad’s ambition has been to have adequate state institutions in place by September 2011. So what has the Palestinian Authority achieved, in tandem with the donor community? Last Sunday the Ad Hoc Liaison Committee met in New York to take stock.

According to the World Bank and the I.M.F., the Palestinian Authority has been remarkably successful in building Palestinian public institutions. The World Bank affirms that Palestinian institutions have achieved a level above the threshold for a functioning state in key sectors such as revenue and expenditure management, economic development, service delivery and security and justice. In this respect, Palestine has achieved more than many states that are full U.N. members, and has also passed a tougher economic stress test than many E.U. member states.

In recent years, illiteracy has almost been eliminated. There is a high standard of health care. Key planning and governance systems are in place, such as the Palestinian Monetary Authority and the Palestinian Central Bureau of Statistics, which operate in accordance with O.E.C.D. standards.

The West Bank has become a safer place under the rule of law, primarily thanks to security reforms, judiciary reforms and training of the Palestinian security forces and effective cooperation with Israel. By assisting the state building project, donors have contributed to the security of Palestinians but also to the security of Israel.

The budget deficit has been reduced by 60 percent over four years, from 27 percent of Gross Domestic Product in 2008 to 11 percent this year. Reliance on foreign aid has been halved. Revenue collection, consisting mainly of taxes and customs duties collected by Israel and transferred to the Palestinian Authority on a monthly basis, has doubled during the same period. Growth has been high, stimulated by structural reform. According to the World Bank, the major obstacle to further growth is the various physical and legal barriers imposed by the occupying power, Israel.

Then what about Gaza? The Gaza Strip is under the political and military control of Hamas. However, the P.L.O. is the legitimate representative of the entire Palestinian people. Moreover, it is the Palestinian Authority that is the main service provider to the people of Gaza. Since 2008, the Palestinian Authority has spent $4 billion — more than half of its external aid — on salaries for teachers and doctors and to cover electricity and water expenses in Gaza.

According to the I.M.F., the Palestinian Monetary Authority exercises full control over private banks in Gaza, ensuring the transfer of salaries and payments, out of the reach of Hamas. Despite Hamas’ repressive control of the Gaza Strip and the unacceptable terrorist rocket attacks on Israel, the non-Hamas Palestinian National Authority reaches almost all of the Palestinian population with key assistance.

So the answer to my initial question — whether the Palestinians can actually run a state — is yes. By building robust and well-functioning institutions, the Palestinians and the donor community have taken a bottom-up approach to the peace process. The final status issues — borders, security, refugees and Jerusalem — can only be settled through negotiations, which is an example of a top-down approach. In an ideal world, these two approaches should have converged. Regretfully, they haven’t. This is the core of the Israeli-Palestinian impasse.

When U.N. member states consider how to cast their vote on the Palestinian issue, they should bear in mind that no resolution will resolve the final-status issues. Only real, serious negotiations will. But the main obstacle to the realization of Palestinian statehood is the occupation. The Palestinians are otherwise fully capable of running a state.