The Palestinian Authority has issued a 2010 budget document laying out a state-building plan.

Palestine: Moving Forward: Priority Interventions for 2010, issued this week by the Palestinian Authority finance and planning ministries, is a Palestinian state and institution building program that complements the diplomatic process the Obama administration is trying to revive, the American Task Force for Palestine's Hussein Ibish told POLITICO.

"It provides a parallel, complimentary, bottom-up track to the top-down diplomatic process, will bolster leaders and constituencies that want to achieve a peace agreement, and is an alternative source of political momentum when diplomacy is gridlocked," Ibish said.

"It's been endorsed by the Obama administration, the Middle East Quartet, the Arab states, and Israel has not opposed it," he continued. "It is constructive, serious, not in contradiction to any legitimate Israeli interest whatsoever, and has immediate political benefits and in the long-term can change the strategic environment in which peace is being sought."

The development plan issued by the PA ministries this week is an outgrowth of the state-building plan envisioned by Palestinian Prime Minister Salam Fayyad.

The State Department seemed to hint at a coming Palestinian state building plan in a somewhat cryptic statement issued yesterday on the trip last week by Middle East peace envoy George Mitchell to the region.

"With the Israelis and Palestinians, Special Envoy Mitchell continued the two-pronged approach we have consistently pursued: (1) To encourage the parties to enter negotiations to reach agreement on all permanent status issues; and (2) to help the Palestinians build the economy and institutions that will be necessary when a Palestinian state is established," State Department spokesman Mark Toner said in a statement yesterday. "The two objectives are mutually reinforcing. Each is essential. Neither can be attained without the other. Special Envoy Mitchell will be following up with the parties in the coming days and he will return to the region in the near future."

Washington Middle East hands said the Mitchell team has recently sought increased control over U.S. development and financial assistance to the PA, to try to support its diplomatic efforts.