This week marks the 45th anniversary of the Arab-Israeli War, when Palestinians living in the West Bank and the Gaza Strip fell under Israel's occupation. Since 1967, the power relationship that ensued has had deep and wide ramifications. What is remarkable is how each side has observed the anniversary.

Israel has hailed its victory as divine providence, a testament to its superiority that kindled a misplaced sense of entitlement for regional hegemony. It annexed East Jerusalem, started building settlements on Palestinian lands, and began a military rule in the occupied territories that only grew more inhumane with each turn of the year.

Palestinians, however, took stock of the calamity, began some earnest introspection, and forged ahead to take charge of their own fate and reclaim their rights with determination and zeal. A relentless pursuit of education and self-empowerment became our telltale sign. Widely recognized as hard-working, educated, resourceful and entrepreneurial, Palestinians became the preferred candidates by employers across the Arab world and wherever else they migrated in search of opportunity.

"The Palestinians built the Gulf" is a common expression among Arabs.

It refers to the countless Palestinian engineers, doctors, judges and businessmen who created the infrastructure upon which the modern Arabian Gulf countries run. And in Latin America, Palestinians figure prominently in many countries where several elected officials, including a few former presidents such as Antonio Saca of El Salvador, have been of Palestinian descent.

Today, Palestinians are putting their track record to good use. They are building institutions, preparing for elections, and expanding civil liberties despite the immense obstacles presented by Israel's military occupation.

Palestinians today control only 18% of the West Bank (60% is under complete Israeli control and 22% is jointly controlled). They have no control over their borders, natural resources or currency. Still, they have managed to operate a promising economy, built financial institutions with levels of transparency and reliability that rival those of postindustrial countries, and achieved a literacy rate of over 98% for the 15-24 age group. Perhaps this determined and aspiring spirit can be captured by the Palestinian Paralympic athletes who are industriously preparing in Gaza and the West Bank for the international games in London this summer, transcending every obstacle they are destined to face.

Ahead of our September 2011 bid for United Nations membership, reports from the U.N., World Bank and the International Monetary Fund confirmed that Palestinians were above the threshold for running state institutions—an achievement that Norway's Foreign Minister Jonas Gahr Stoere deemed as "a remarkable international success story."

This is our story despite the 45 years of occupation. Imagine what Palestinians would accomplish if they were freed from the current constraints. Imagine what we would accomplish once we claim back the Jordan Valley, the West Bank's bread basket, or if we controlled our borders and hosted millions of pilgrims to the Holy Land? Then imagine the thousands of people flocking to cross a highway between the West Bank and Gaza. Imagine the opportunity, the richness, and the hope that such a scene would bring.

Israel, in contrast, is entrenching its occupation, offering tax breaks to lure more Israelis to settle in the occupied territories, tightening its control over East Jerusalem, and raising the rhetoric over their unwillingness to share the Holy City.

Yes, 45 years later, Israel may have proven that it is the strongest army in the region, but is it safer? Are its prospects for the future more promising? It does not seem so.

Israel should see that its prosperity and its security lay not in more defense spending, more wars, more walls or more settlements. Instead it lays in a strong, sovereign and vibrant Palestine living next to it.

It is in Israel's vital interest to come to a complete resolution of the conflict between it and the Palestinian people sooner rather than later, relieving the weight of this tragic conflict from both of our peoples' shoulders. We owe it to ourselves. We owe it to the world.

Mr. Areikat is the chief representative of the general delegation of the Palestine Liberation Organization to the United States.