AMMAN - Global and regional politics are not yet ripe for a Palestinian state, according to Palestinian Prime Minister Salam Fayyad, as leadership in Ramallah eyes a less than certain future.

The Palestinian premier, a champion of institution-building as a path to statehood, said the current political conditions within Israel, the Palestinian territories and across the world are not favourable to lead to concrete steps towards a Palestinian state.

“The conditions are not ripe for resumption of a political process capable of delivering an end to the Israeli occupation,” Fayyad said in a lecture delivered at the Amman-based Columbia University Middle East Research Centre on Thursday.

The former International Monetary Fund official said that with the EU preoccupied with the Eurozone crisis, the US nearing presidential elections, and the Arab Spring bringing sweeping change throughout the region, the Palestinian cause has been pushed to the background of policy makers’ concerns.

“The world has moved on and we are alone, effectively.”

Fayyad defended the Palestinian Authority’s (PA) focus on strengthening public agencies and services, claiming that rather than “giving in” to the Israeli occupation, Ramallah succeeded in building state institutions “in spite of occupation” to expedite its end.

The two-year drive has had particular success in attaining Ramallah’s financial independence, with the PA set to enter 2012 without any outside support for its current expenditures.

The premier noted that in parallel to his institution-building approach, Palestinian officials were to pursue a political track to secure statehood, with the two to have taken off by September 2011, two years from the day the PA launched the initiative.

While the PA’s push has resulted in paved roads, strengthened institutions and improved services and investment climate, after two years, the political elements of an independent Palestinian state remain as elusive as ever.

“Unfortunately the political track has not taken off,” Fayyad said, indicating that failure was a driving factor behind the PA’s UN statehood bid.

Fayyad admitted that recent attempts at direct and indirect talks have failed in securing concrete steps towards statehood, falling short of the parameters set by previous talks in the 1990s and the so-called 2003 roadmap.

“We have not been successful in getting what we wanted to get… it’s a failure we should assume full responsibility for,” Fayyad said.

The stalled peace process has led to an “erosion of references”, Fayyad claimed, with Israeli negotiators and politicians raising the bar for concessions following each unsuccessful talk, setting back Palestinians’ statehood bid with each round.

The failure in talks has resulted in Tel Aviv demanding control of Jerusalem and large swathes of the West Bank, offering Palestinians what Fayed described as a “state of leftovers”.

“This is not the state we are looking for.”

“We are looking for freedom from Israel…not a struggle for equal voting rights in Israel,” Fayyad noted.

The premier listed a series of measures casting doubt over the Israeli government’s sincerity to support a Palestinian state: denial of construction permits in West Bank lands designated as Area C, ongoing settlement building, and - most recently - threats to withhold some $200 million in tax revenues in retaliation for the authority’s UN statehood bid.

“If the Israeli leadership is turning something as simple as handing over our tax revenues into a political football… and talk about ‘punishing the Palestinians, how can we talk about peace?”

The official highlighted that recent reconciliation efforts between Hamas and Fateh, which Fayyad stressed should remain a purely internal Palestinian matter, is more than political manoeuvring but a practical necessity.

“It will not be possible to secure a state of Palestine until we are able to reunite our people and the institutions of our country,” he said.

But Fayyad said the “encouraging” talks between the two sides have so far lacked “practical steps” towards forming a unity government and unifying public institutions to serve Palestinians equally from the Mediterranean coast to the River Jordan.

Fayyad suggested that rather than attempting to broker an all-encompassing agreement, the two sides take “modest” steps towards reunification of the Gaza Strip and the West Bank ahead of launching wider political reconciliation efforts.

In response to a question following the lecture, hosted as part of the Young Presidents’ Organisation, the Palestinian premier denied that the Palestine Liberation Organisation would consider dismantling the PA in a bid to pressure Israel to return to the negotiating table.

“We will only dissolve the Palestinian Authority once we have established a Palestinian state,” Fayyad said.

Despite the historic changes from the Arab Spring, the future of a Palestinian state is far from certain.

As Palestinian leadership faces the question “what next?” Fayyad claimed that Palestinians within the West Bank, Gaza, Jordan and beyond can turn to Ramallah’s progress over the past two years as a source of inspiration for the future.

“There is a lot to complain about, there is a lot to cry about,” Fayed said.

“But there is a lot to cheer about as we have risen to our own challenge.”