The big news in Ramallah, where a few extremely generous and well-informed journalists were nice enough to show me around on Sunday, is the expected move by the Palestinian Authority (PA) this month to push for recognition of a Palestinian state at the UN. This is a highly complicated and sensitive issue which many Palestinians view with some trepidation. For one thing, the PA's government and economy (which grew at a very satisfactory 9 per cent clip last year; there are snazzy retail-office complexes and condos going up all over Ramallah) are heavily dependent on donor aid from the US and EU. A unilateral declaration of statehood could cut off the flow, either because donors would drop out or because Israel would block financial support. The PA is already months behind on salary payments to its staffers, many people have car payments and mortgages to meet and the veneer of prosperity and optimism masks much precarious uncertainty. But because the PA leadership has already committed itself to asking for statehood, walking the idea back or coming up with a squishy enough formulation to avoid donor retaliation would be difficult.

Second, the push for statehood requires the PA to get people out in the streets this month to show support, in order to generate headlines and focus international attention. But demonstrations could get out of hand, and while most people think Mahmoud Abbas and Salam Fayyad, the Palestinian president and prime minister, can prevent violence, radical splinter groups or Hamas itself could always decide their own interests are best served by provoking a blowup. Recent terror attacks in southern Israel and subsequent rounds of Israeli retaliatory raids and shelling from Gaza are probably related to Hamas's need to assert itself in the run-up to the statehood bid.

Clearly, what this delicate situation calls for is some inflammatory grandstanding by blowhards in the US Congress! Step forward, Ileana Ros-Lehtinen, chair of the House Foreign Affairs Committee. On Tuesday she introduced a bill to cut off US funding to any UN organization that recognises Palestinian statehood:

Ros-Lehtinen has long been a critic of the United Nations. The legislation she introduced Tuesday would also withhold a portion of U.S. dues to the international body if it does not change its funding system so that dues are paid on a voluntary rather than assessed basis.

In a letter to her colleagues explaining the purpose of the "United Nations Transparency, Accountability and Reform Act", Ros-Lehtinen wrote that a Palestinian self-declared state "would short-circuit the negotiating process, and would severely undermine opportunities for peace between Israel and the Palestinians".

There are many reasons why Ms Ros-Lehtinen's bill is a bad idea. Here are just a few. First, threats to cut off funding from UN agencies will not influence the UN's decision as to whether or not to recognize Palestinian statehood. The PA will make its statehood pitch first to the UN Security Council, where the US will veto it. The PA will probably then take the proposal to the General Assembly, where a two-thirds majority in favor of recognition is overwhelmingly likely. That vote depends on the stances of sovereign states around the world. These sovereign states have foreign policies of their own. Ghana, India, Brazil, Kazakhstan, Eritrea, France and the Dominican Republic will not change their votes on recognition of a Palestinian state because of a US threat to cut off funding for UNICEF.

Second, while Ms Ros-Lehtinen seems to believe that the UN's agenda consists almost entirely of issues related to Israel, there are in fact many other things that UN agencies do in other parts of the world. Think about how you would explain to, say, a starving Somali refugee that you cut off funding for the UNICEF programme that is keeping her and her children alive because the organisation upgraded its Palestinian mission from "observer" status after the UN recognised Palestinian statehood. I'm sure she'd understand that obscure and tangential efforts to deter the PA from adopting negotiating strategies that are uncongenial to US interests trump such peripheral issues as feeding starving kids.

But perhaps the dumbest part of Ms Ros-Lehtinen's bill is that it would cut off US funding for UNRWA, the agency that administers Palestinian refugee camps in the occupied territories and neighbouring Arab countries, currently set at $230m for FY 2011. There's no conditionality attached here; she simply wants to cut off the funds, regardless of whether the PA pushes for statehood or not. This would push an already-precarious PA closer to financial collapse, threatening the economic wellbeing on which the current quiet in the West Bank rests. Every Israeli and Palestinian I talked to gave the same reason for the recent absence of violence in the West Bank, and especially in Ramallah: "They have something to lose." The new cars and happy shoppers in the streets of Ramallah just before Eid al-Fitr are the main underlying reason why Palestinians there aren't staging terror attacks, as those in blockade-starved Gaza are. The fact that the Palestinian economy remains a ward of foreign donors is depressing, unsustainable and debilitating to Palestinian society; but until a peace deal is signed, cutting off that donor money only risks plunging the PA back into chaos, undermining its authority, provoking a return to terror and killing the peace process for another few years. To put things another way: if the US and UNRWA cannot support poor Palestinians, Iran and Hamas will.

The prospects for peace look pretty discouraging right now, but there are bright spots. Palestinians are optimistic about their future, angry at corruption and hungry for a generational change. The PA leadership is genuinely committed to non-violence. Most important, many Israelis seem to have internalised the idea that crushing the Palestinian economy and government does not make Israel safer; it makes it less safe. The more prosperous Palestinians are, the stronger the PA is, the better are the chances of concluding a peace deal. Unfortunately, Ms Ros-Lehtinen's bill and her political incentives line up in the opposite direction.