Last Friday, Palestinian President Mahmoud Abbas announced that he’ll be going to the United Nations on September 26 to seek full recognition of Palestinian statehood, based on 1967 borders with Israel, via the UN Security Council. The US is sure to vote “no” to full recognition, and various European countries may abstain or likewise reject the proposal. In that event, Abbas has said he’ll seek “non-member observer” status for Palestine, conveyed via the more flexible General Assembly. This would be a largely symbolic victory but, as some analysts have noted, it might enable the Palestinians to refer Israeli officials to the International Criminal Court. The United States, EU and Middle East Quartet led by Tony Blair are now engaged in eleventh-hour pre-emption to renew direct talks between Israel and the PLO, negotiations which are, according to the 1993 Oslo Accords, the internationally accepted path to peace.

The best arguments against the UN bid have been advanced by the American journalist Jeffrey Goldberg, who questions the sort of “state” that will be created by a piece of paper, and Council on Foreign Relations senior fellow Robert Danin, who argues that the UN can only grant the Palestinians provisional borders as a starting point for resolving the outstanding questions of the fate of Jerusalem and the “right of return” of some 5-6 million Palestinian refugees. In other words, they’ll be granted precisely the plan that they rejected from the Quartet’s 2003 “Roadmap for Peace.” But, as an added bonuses, the newly independent Palestinians will earn a reputation for shirking real diplomacy in favour of diplomatic grandstanding, and those refugees might be legally forsaken for reasons I discussed in a previous blog post.

Washington’s hostility to Abbas’s decision has been the starkest. No fewer than 88 US senators have co-sponsored a non-binding resolution that threatens to restrict US aid to Ramallah if Abbas goes ahead on Monday. “The Senate has delivered a clear message to the international community that United Nations recognition of a Palestinian state at this time does not further the peace process," Democrat Senator Benjamin Cardin, a lead sponsor of the resolution, has said. "A permanent and peaceful settlement of the Israeli-Palestinian conflict can only be achieved through direct Israeli-Palestinian negotiations."

I quite agree with the latter sentiment, which is why it’s imperative that the US doesn’t restrict aid as a form of punishment. As counter-productive as the statehood bid is, bankrupting the party responsible would be a hell of a lot worse.

For one thing, it would likely scupper Prime Minister Salam Fayyad’s state- and institution-building programme, which he announced two years ago as a way to “end the occupation despite the occupation.” For Fayyad, a former World Bank economist and a political independent, the idea was simple: to take the corrupt patronage system that Yasser Arafat bequeathed his people and turn it into a transparent and technocratic government where foreign investment and international acceptance would be earned rather than given. It was a way of making Palestinians self-sufficient agents of their own destiny rather than catspaws of Arab – and, indeed, Western – interests.

I interviewed Fayyad in 2009 and he told me: “[W]e’re building toward statehood and getting ready for statehood, and that’s a Palestinian responsibility. It is unilateral. But it is positive unilateralism. Nowhere in that document do we mention the unilateral declaration of statehood. That’s a political declaration and that’s the purview of the PLO. So we’re very careful there.”

His bosses, clearly, aren’t so careful.

Nevertheless, Fayyad's partially funded and now deeply imperilled programme has seen the construction of new schools and roads and commercial complexes, the re-opening of long-shuttered cinemas and cultural centres, and the professionalisation of the Palestinian gendarmerie – clearly the most tangibly successful initiative to date. Security has improved so dramatically under Fayyad’s purview that, last November, the Israel Defence Forces designed the northern West Bank “terror-free” for the first time since the outbreak of the second intifada in 2000. The IDF has dismantled hundreds of roadblocks and checkpoints – and some sensitive security barriers – as a sign of confidence in its Palestinian counterpart.

The problem is, to build a state, you need other people’s money to do it. The United States gives the PA roughly $500 million every year; in 2010 that figure was closer to a billion, owing to Fayyad’s Phase II of state-building and his reputation as a clean dealer. But since Fatah, the party that controls the West Bank and that has fired Fayyad, announced a “reconciliation” accord last April with its long-time Islamist rival Hamas, which controls Gaza, the chief worry has been that Western chancelleries would find themselves inadvertently funding a proscribed terrorist organisation. Hamas gets the bulk of its money from Iran, so not only would American dollars funnelled into a collective PA kitty go toward underwriting rocket and mortar fire on Israeli neighbourhoods, but those dollars would also be commingled with the subsidy of the internationally sanctioned, nuclear bomb-seeking Islamic Republic. Now that’s got to be a fun Sudoku puzzle for Treasury Department lawyers to figure out, but it’s just one of the practical reasons why Fatah-Hamas reconciliation – fated to fail for ideological reasons, too – has so far been a dead-letter.

Nevertheless, let’s say the US did cut its aid packet as a time-out on Palestinian misbehaviour. What might happen if the 150,000 public employees in the West Bank went on strike because of the PA’s inability to their pay salaries on time? (It’s been late to pay them twice already in the last three months, mainly because Arab League states have refused to pony up their due. Saudi Arabia now says it’ll give $200 million to the PA as a birthday present for statehood. We’ll see.) Fayyad has got a 25,000-strong police force under his command, 5,000 members of which have been trained by the US Lt Gen Keith Dayton. If these cops quit their posts, the IDF will have to re-up its presence in the West Bank or risk the total collapse of Palestinian society and, possibly, a third intifada. That would mean that the statehood bid actually increased the Israeli occupation.

Even the Netanyahu government has seen past its anger at Abbas to pragmatically outfit the PA with anti-riot gear in the event that a Security Council "no" or a General Assembly "yes" leads to an eruption of violence. And here's another pickle: what becomes of the de facto separation of security forces between Hamas and the PA if the former’s "armed wing," the Al-Qassams Brigades, are the only equipped and paid-up militia in town? Can you think of a better time for an Iranian-funded terrorist proxy to partake in political killings or attempt a coup? (Hamas, conspicuously, doesn't approve of the UN gambit than more than the ayatollahs do because neither wants to see the two-state solution codified.)

The Palestinians have already hurt themselves by abandoning direct negotiations for a damn-it-all and hollow bid for statehood. The United States needn’t make matters worse by tearing up the cheques that have purchased a measure of calm in Palestine, however uneasy or temporary it may be.