JERUSALEM — Israel is coming under concerted international pressure to give swift agreement to specific measures to improve Palestinian life in the West Bank which senior diplomats believe could eventually make or break negotiations between the Israeli Prime Minister, Ehud Olmert, and the Palestinian President, Mahmoud Abbas.

Efforts are under way to persuade Israel to agree ahead of President Bush’s visit in just over two weeks’ time to relaxing a series of restrictions on the Palestinian economy and testing the Ramallah-based authority’s ability to take more responsibility for security in parts of the West Bank.

Israel is expected to face sharp criticism at Friday’s international donors’ conference in London for not doing more to boost the Palestinian economy after circulation of a World Bank paper reporting zero growth in 2007 and arguing that that the “contributing effects of the closures and movement restrictions cannot be overestimated.”

While the growth levels are compounded by the near total collapse of Gaza’s economy, the World Bank paper also emphasises the marked increase since 2005 of checkpoints and roadblocks in the West Bank. The proposals now being urged on Israel include the removal of checkpoints in the West Bank itemized in a detailed list submitted to Israel two weeks ago by Tony Blair, as international Middle East envoy, as well as easing the remaining restrictions in the way of completing the economic development and industrial park projects also earmarked by Mr Blair. The defense minister, Ehud Barak, has yet to give his formal response to the checkpoint list.

But discussion within the international Quartet of the U.S., E.U., U. and Russia is also focusing on the prospect of designating a pilot area of the West Bank in which Palestinian forces trained with U.S. assistance in Jordan would take full responsibility for security, including the curbing of armed factions.

One possible location is the northern West Bank city of Jenin, widely canvassed for the first intake of 600 to 700 security personnel trained by the U.S. and Jordan. The battalion is envisaged as the first of five or six which the U.S. would like to see in the West Bank.

Diplomats are also pressing Israel to lift severe restrictions on Palestinian development in “Area C” of the occupied West Bank, where Israel retains full control, and where the World Bank paper charges that “obtaining permits for projects… whether for private, humanitarian or developmental purposes is time consuming if not unattainable.”

According to accounts of a donor meeting in Ramallah last week to prepare for the London conference, delegates including the American USAID representatives, argued that the Palestinian Prime Minister, Salam Fayad, and donors were largely playing their part in realizing progress envisaged at Annapolis last year.

At the same time they endorsed the broad implication of the World Bank paper that a key obstacle in achieving “the virtuous cycle” of Palestinian economic growth designed to boost the negotiating process was Israel’s reluctance to relax restrictions on Palestinian movement and access to markets.

Gordon Brown is expected to speak at the London conference of the Ad Hoc Liaison Committee members who include the U.S., E.U., U.N., Russia, Israel, Canada, Norway, Jordan, Saudi Arabia and Tunisia.

While donations from the $7.7bn pledged at the Paris conference co-chaired by Blair earlier this year have so far been coming in on schedule, there remains a potential shortfall specifically for budget support of around $400m from July. Some donors from the Arab world may well argue on Friday that meeting this shortfall will be conditional on the easing of restrictions by Israel, including on Gaza.

Meanwhile, in Washington this week, Secretary of State Condoleezza Rice convened a meeting of American private sector business leaders and leaders of the U.S.-Palestinian Public-Private Partnership initiative to explore opportunities for investment in Palestine in the run-up to the Palestine Investment Conference in Bethlehem on May 21-23, 2008. Partnership chair Walter Isaacson and co-chairs Jean Case and ATFP President Ziad J. Asali attended the meeting at the State Department along with Secretary Rice and other senior government officials.

Also participating were senior figures in the American private sector business community including Paul Otellini, president and CEO of the Intel Corporation; Deborah Marriott, senior vice president of Marriott International; Tom Mattia, senior vice president of the Coca-Cola Company; Jesse Clayton of Ergon Capital; and Ian Davis, vice president of Occidental Petroleum Corp., among others.

At the meeting, Secretary Rice provided an overview of current relations between Israel and the Palestinians following the Washington visit last week of Palestinian President Mahmoud Abbas, and highlighted “the strategic importance of increasing U.S. private sector investment in the West Bank.” The State Department said that the key objectives of the meeting were to “gain support from the private sector representatives for investment in the quick-impact job creation projects being developed by the Partnership” and to promote the Palestine Investment Conference in Bethlehem. The Conference will be aimed at improving the economic and social living standards in Palestine through increased investment in the Palestinian economy.

ATFP President and Partnership co-chair Ziad J. Asali said, “the presence at this meeting today and the interest shown in investing in Palestine by these senior business leaders of our country is an extremely encouraging development. Palestine is open for business, and that message is being welcomed by the American private sector community. I am gratified that Secretary Rice has taken the initiative in highlighting the strategic importance of American private investment in the Palestinian economy to our nation’s national interests. However, it is impossible to overstate the importance of movement on the political track towards the establishment of a Palestinian state.”