STEVE INSKEEP, host:
Palestinians hope that Jerusalem will one day be the capital of their future state. But for now, the neighboring West Bank city of Ramallah serves as the Palestinian's political, commercial and cultural center. And while the larger Palestinian economy is a mess this once sleepy city is booming.
NPR's Lourdes Garcia-Navarro reports.
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LOURDES GARCIA-NAVARRO: Cafe De La Paix in Ramallah is one of the host of new restaurants, bars and cafes that have sprung up here over the past few years. The food is European. Groups of Palestinians sit at slick wooden tables munching on Caesar salads and sipping cappuccinos. While the music, Celine Dion's "I'm Your Lady," isn't cutting edge, the scene on this afternoon is hip and cosmopolitan. Samir Azbah(ph) is a 20-something computer engineer.
Mr. SAMIR AZBAH (Computer Engineer): There's no work in the West Bank except here, so everybody is coming to Ramallah in order to work. We have a lot of coffee shops, a lot of restaurants here. I don't know, we have bars, also here. We have a lot of things to do here.
GARCIA-NAVARRO: While the rest of the West Bank's economy is moribund, Ramallah is booming. Buildings are springing up all over this city.
Mr. PETER SCHONENBERGER (Manager, Movenpick Hotel): So this is the main entrance of the hotel.
GARCIA-NAVARRO: Peter Schonenberger is the manager of the new five-star Movenpick Hotel that's set to open this summer in Ramallah.
Mr. SCHONENBERGER: The situation here in Ramallah has become very safe. We do think that new businesses attract it. And businessman will come over here, and, of course, the socio-cultural role which the hotel will play for the upper class of the people who are living here.
GARCIA-NAVARRO: Mohammad Shtayyeh is the president of the Palestinian Economic Council, which is overseeing the development of a new five-hospital medical complex and a city park in Ramallah.
Mr. MOHAMMAD SHTAYYEH (President, Palestinian Economic Council): All the Palestinian ministries and the cadre of the ministry, the civil servants, most of them are actually station in Ramallah. The main headquarters of 22 banks that are working in Palestine are in Ramallah.
GARCIA-NAVARRO: He says that because jobs and money are concentrated here, that has generated other businesses.
Mr. SHTAYYEH: All those who are working in telecommunication, in IT, in the banking sector are young people, educated in the United States or in Europe, and exposed to Western culture. To my astonishment, all cafeterias are simply full.
GARCIA-NAVARRO: At least 30,000 people commute to Ramallah every day, and tens of thousands of others have moved here in the past decade. The effect? Shtayyeh says real estate prices have become astronomical.
Mr. SHTAYYEH: Ramallah is very limited in space. On the east of Ramallah, there is a Jewish settlement. On the southeast of Ramallah, there is the borders of Jerusalem. And on the west of Ramallah, there is a military camp. So Ramallah has no place to grow.
GARCIA-NAVARRO: Except up, and high rises are being built all over the city. But Shtayyeh says that all this apparent economic activity is misleading. Most of the money propping up the growth here comes from either Palestinians who live abroad or from international donors, and it doesn't reflect what's happening in the rest of the West Bank, says Shtayyeh.
Mr. SHTAYYEH: There are 612 Israeli military checkpoints. The West Bank is fragmented. There are 185 Jewish settlements in the West Bank. When you look at the micro picture over Ramallah, it looks rosy. When you look at the macro picture over the West Bank, it looks depressing.
GARCIA-NAVARRO: Overall, economic growth in the occupied Palestinian territories is at zero, he says. Unemployment is at 30 percent. Forty-seven percent of Palestinians live below the poverty line. But that hasn't stopped people from wanting to open businesses in the de facto capital of the West Bank.
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GARCIA-NAVARRO: The room is packed at the opening of an art exhibition at Birzeit University. Hadar Musla(ph) is attending. He's about to open an antiquity store called the Splendors of the Orient in downtown Ramallah. He says he used to own a shop in East Jerusalem, but he feels it makes more sense now to open his business here.
Mr. HADAR MUSLA (Entrepreneur): I am quite confident because I am sure that the stuff I have is exclusive and I have a competitive edge over others.
GARCIA-NAVARRO: He says there's an opportunity here now, and like many businessmen, he wants to grab it.
Lourdes Garcia-Navarro, NPR News, Ramallah.
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