When the Palestinians lodge their formal application for statehood on Friday, they will simply be asking the United Nations to recognise the remarkable turnaround that has taken place in their political fortunes. It was not that long ago that the Palestinians desperate desire for independence was constantly being undermined through their association with violence and terrorism, and the endemic corruption that affected the few political institutions that they had. And yet take a stroll around downtown Ramallah today and you will see a society so transformed that Kentucky Fried Chicken has just become the first American fast food chain to open a franchise in the Palestinian-run city. Corporate America is not in the habit of opening new branches in known war zones, so the fact that young Palestinians can now gorge themselves on deep-fried chicken represents a significant shift in the way they are perceived by the outside world. The key to this transformation lies in the ambitious plan to create a Palestinian state that has been executed under the stewardship of Salam Fayyad, the Palestinian prime minister. For the past two years, he has been engaged in rooting out the corruption that had become commonplace during the Yasser Arafat era. In its place, Mr Fayyad has assembled an impressive array of institutions, including a central bank that will bring a degree of probity to the fledgling Palestinian economy and an effective security apparatus. Mr Fayyads ambitious nation-building programme has been compared to the achievements of the early Zionist settlers, who succeeded in establishing all the key institutions necessary for statehood long before Israel officially proclaimed its independence in 1948. And it has received the enthusiastic support of both the United States and the UN, which regard the development of such institutions as being vital to the implementation of their long-standing call for the creation of an independent Palestinian state. Even Israel has been quietly co-operating with the venture, allowing vital equipment and supplies to pass through Israeli-controlled checkpoints. So far as the Israelis are concerned, a properly administered and efficient Palestinian bureaucracy relieves them of the onerous burden of running the Palestinians affairs. Now all that hard work is over, the logical next step is for the Palestinians to lodge their application at the UN to be granted statehood or so you would think. The Palestinians have, after all, lived under Israeli military occupation for 44 years. It is difficult not to have some sympathy with the Palestinians desire to achieve the same freedoms that many other young Arabs are acquiring as a result of the anti-government protests that have swept the Middle East this year. The overwhelming majority of the 1.5 million Palestinians living in the West Bank were born after the 1967 Six Day War, which resulted in Israel occupying the Arab towns and cities on the West Bank of the River Jordan. Consequently, they have grown up in a climate of constant violence with Israel waging a relentless campaign to crush Palestinian terror groups. Then there is the constant disruption caused by the illegal activities of Jewish settlers who now comprise an estimated one third of the West Bank population, the majority of them living in homes built on land formerly owned by Palestinian families. The stifling atmosphere created by Israels uncompromising military occupation has also thwarted the career opportunities of a generation of young Palestinians who, realising they had no future, emigrated to Europe and America. Clearly this is a situation that cannot prevail indefinitely, which is why Israeli and Palestinian leaders have made repeated attempts to negotiate a peace settlement. The first serious effort came during the 1970s, but the intransigence of Arafats Palestine Liberation Organisation meant that the Palestine issue was left unresolved when the Camp David Accords were signed by Israeli prime minister Menachem Begin and the Egyptian president Anwar Sadat. A good deal of optimism that a lasting settlement could be reached was generated after the Oslo Accords in the 1990s, but they were torpedoed when Israeli prime minister Yitzhak Rabin was killed by a Jewish extremist. Since then, there have been many attempts to revive the process, such as President George W Bushs pronouncement of a Road Map to settle the issue. But a combination of Israeli intransigence and the more militant approach adopted by radical Palestinian groups such as Hamas has thwarted progress. The deadlock has resulted in increasing numbers of young Palestinians supporting Hamas, with its constant missile and suicide bomb attacks on Israeli cities. In Israel, meanwhile, some hard-line politicians have said they will never accept the creation of a Palestinian state. It is to break this deadlock that the Palestinian leadership is launching its most ambitious bid for legitimacy to date by seeking to become the UNs 194th member state. And, for once, the Palestinians diplomatic initiative is generating widespread support. British officials estimate that more than two thirds of the UNs member states would support the Palestinian application if it is put to the vote at the General Assembly. The Palestinians. also enjoy considerable backing at the UN Security Council, which has the ultimate say over membership. But the main sticking point here is that the United States, which is sympathetic to the Palestinian cause, has indicated it would veto the application, arguing that it would be foolhardy to grant the Palestinians statehood while their differences with Israel remain unresolved. Israeli prime minister Benjamin Netanyahu has even warned that a unilateral declaration of independence on the part of the Palestinians would lead to renewed violence, as Israel would be unwilling to ease its restrictions on the Palestinian territories until the Israelis had received convincing guarantees of their own security. The issue of Israels future security has been at the heart of all previous attempts to negotiate a peace settlement, and needs to be addressed before any agreement is reached to implement a two-state solution, where an Israeli and a Palestinian state flourish in peaceful co-existence. The problem for Israel is that time is no longer on its side. In the past, successive Israeli governments have been able to indulge in the politics of procrastination because they knew the Palestinians enjoyed little international support. No longer. This summers protests have resulted in the political empowerment of millions of young Arabs who had previously known nothing but frustration and repression. At a time when their fellow Arabs are experiencing the heady delights of political freedom, it is only natural that the current generation of highly educated young Palestinians should share similar ambitions. The confrontational approach Mr Netanyahus government takes to any challenge to Israeli sovereignty has also resulted in Israel being more isolated diplomatically and politically than at any time in its recent history. Israels ill-advised military interception of a Turkish peace flotilla last year, in which nine people died, has led to a serious breach in relations with Ankara. Meanwhile, Israels equally heavy-handed response to attacks by Islamic militants in the Egypt-controlled Sinai peninsula provoked anti-Israeli riots in Cairo, which resulted in the evacuation of the Israeli ambassador and his staff. Even the United States, long a stalwart supporter of the Israeli cause, has voiced its dissatisfaction with Mr Netanyahus refusal to engage properly in negotiations with the Palestinians. Seismic changes are taking place in the Middle East of the 21st century, and it is very much in Israels long-term interests that it adjusts its approach to its neighbours accordingly. And what better way to start than by giving the Palestinians statehood claims the seriousness they deserve? Telegraph