The city of Ramallah, less than half an hour north of Jerusalem, saw the opening this week of its first five-star luxury hotel, despite Palestinian Authority claims that Israel is strangling the local economy.

The hotel, a franchise of the Swiss-based Movenpick chain, has 171 rooms and suites, an outdoor pool, and a fitness center, and cost $40 million.

The opening was not entirely perfect, as the hotel is not yet set up to provide ice cream. Co-owner Talal Nasreddin spoke to the French news agency AFP and blamed the lack of ice cream on “Israeli procedures at the crossings.” Israel inspects goods imported to Judea and Samaria in order to prevent arms smuggling.

While AFP reported that foreigners have returned to Ramallah “as security has improved,” the article – and the PA officials it quoted – did not note Israel's role in stemming terrorism in the region and creating initiatives to improve PA employment and ease travel in the region.

Prime Minister Binyamin Netanyahu has taken as strong stand for an "economic peace," meaning that a strong PA economy would  make peace possible.

The PA has recently shunned Israeli employment ventures, going so far as to make it illegal for PA Arabs to work for Israeli employers in Judea and Samaria. PA leaders are hoping that foreign funding for projects in Bethlehem and in the planned PA city of Rawabi will allow for the creation of new jobs to replace those currently provided by Israelis.

The PA economy has been a controversial topic as foreign money floods to the area, but appears to have little impact. PA Prime Minister Salam Fayyad recently told foreign leaders that the PA will be ready for statehood – if a $1 billion deficit is covered. However, his prognosis of a soon-to-be-independent economy has been questioned; a professor warned in July that Fayyad is not truly changing the floundering PA economy, while the World Bank has warned that the PA is in danger of becoming a welfare state.

Officials interviewed by AFP  for its report on Ramallah's new luxury establishment took the construction of the hotel as a warning sign as opposed to a sign of progress. PA spokesman Ghassan Khatib said, “Without political progress, security and economic progress is not sustainable. This is what we have learned from the 43-year history of occupation.”

Businessman Sam Bahour said the hotel's investors “have taken a leap of faith with the conviction the occupation will end.”

Talks between Israel and the PA are currently on hold. Netanyahu has called for Israel-PA discussions with no preconditions, and the PA came to the table in mid-2010, several months after Israel voluntarily froze construction in Judea and Samaria for a 10-month period. However, the PA has refused to negotiate as long as Jews living in Judea and Samaria are allowed to continue to build, and it withdrew from talks when the freeze expired, having met with Israeli leaders only one time.

PA leaders have demanded a construction freeze that would be in force in all Israeli towns beyond the 1949 armistice line, including Jerusalem and other cities that Israeli leaders say will remain a part of Israel under any peace deal.

In Gaza, luxury projects have been built despite the lack of any negotiations between Hamas and Israel. A new luxury mall opened in Gaza City in the summer, and a reporter who visited the region noted a feeling of "absolute prosperity" in some circles despite the poverty elsewhere.