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MARCO WERMAN: While Christians in Bethlehem are still hoping for revitalization, Palestinians in another part of the West Bank say the economy there is humming. The World's Aaron Schachter reports from Ramallah.

AARON SCHACHTER: This would have been an odd sight not too long ago in Ramallah, the West Bank's de-facto capital. At one in the morning, the bar Blue is thumping. It's not that there haven't been bars here before, but step outside and you can hear the music from numerous clubs. Late night spots, restaurants, and western-style coffee shops are sprouting up all over town. Across town is the Zamm Coffee Shop. It's sleek, efficient, and the coffee is good.

NAEL KARAEEN: This is the moment to make peace and to make a country that can live, that can grow up.

SCHACHTER: Nael Karaeen is Zamm's manager. The owner snagged him from a coffee chain in Israel.

KARAEEN: There is no fighting in this area, no fighting. Nobody is stealing anything from his neighbors like what was going in the 90's for ten years.

SCHACHTER: Zamn sees 250 to 300 customers a day. The prices here are on par with cafes in Israel. Clearly, people have money to spend – both to buy and to invest.

ABEER BAYARI: Ankars Suites, good evening. Abeer speaking.

SCHACHTER: Abeer Bayari manages the Ankars Suites hotel. The company recently added six suites on two floors to keep up with demand.

BAYARI: I think two years ago it was like everybody was complaining, you know? But as I see now it's getting better. I work here like four months now and I see that it's going better and better. And now we are full. We have no rooms available.

SCHACHTER: The boom suggested by the occupancy rate at the hotel and the foot traffic at Zamn Cafe isn't just anecdotal, says Palestinian economist Samir Barghouti.

SAMIR BARGHOUTI: Indicators for 2008 was positive in West Bank. There is growth between 3 to 4 percent. There is new investment, mainly in construction.

SCHACHTER: Barghouti says since Hamas took over Gaza two years ago, Palestinians and Israelis have focused their efforts on bolstering the West Bank, mainly this city, Ramallah. This is where the banks, the insurance companies, and other major businesses are headquartered. Aid agencies are based here, there are numerous colleges and universities and the stock exchange moved here recently.

BARGHOUTI: Ramallah is moving to be like other big capitals in the world, everything is there. Since second intifada in 2000, many businessmen from other parts of the West Bank have moved to Ramallah, liberal people who can't for cultural reasons, cannot live in Hebron or Jenin.

SCHACHTER: Perhaps the most important reason for the growth is that public employees are finally being paid on time. 25 percent of employed Palestinians are government workers. The west blocked funding for the Palestinians for the 2006 / 2007 fiscal year to protest the then Hamas-led government. Once Hamas was ousted from the Palestinian Authority, the west turned on the spigot again. Hamas still controls the Gaza Strip, and there are no reliable economic figures. But Barghouti says the economy there is a mess. Despite the stats on the West Bank, not everyone is agog about the way things are going. Businessman Mazen Sinokrot is the former Palestinian Economy Minister. He says the figures are better than they used to be, but that doesn't make them good. He compares the Palestinian economy to the Israeli economy since the Oslo Peace Accord was signed in 1993.

MAZEN SINOKROT: We Palestinians, when we have signed this peace accord, our income per capita was $1800 dollars per year per person. Now, it's $1200 dollars per year per person. While Israelis since Oslo, 1993, income was $6000 dollars; today they are $25,000 income per capita. Our GDP in 1993 was about 5.5 billion dollars. Today, we are only 5.5 billion dollars after 17 years, while Israel was $40 billion dollars. Today, they're $150 billion dollars.

SCHACHTER: Sinokrot calls Ramallah a Golden Cage – drive a few miles in any direction and you're faced with a scene like this.

WOMAN: Can I see your ID please?

SINOKROT: Yes.

WOMAN: And passport?

SINOKROT: Yes.

SCHACHTER: This is the main Israeli checkpoint between Ramallah and Jerusalem. These checkpoints make getting workers or goods in or out much more difficult. Israel's new Prime Minister Benjamin Netanyahu isn't likely to ease up on the checkpoints, but he does say he's interested in promoting Palestinian growth through what he's called “economic peace.” For The World, I'm Aaron Schachter, Ramallah, the West Bank.

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