A drop-off in the delivery of aid to the Palestinians is threatening their financial stability, Israel warns in a report to be submitted to international donor countries later this week.
The report says Israel has done its part to boost the Palestinian economy, but its growth has nonetheless slowed, and that a drop in aid has helped create a serious financial crisis for the Palestinian government.
But the Palestinians, in their own report to the donor countries that will meet on Wednesday in Brussels, say their development efforts have been systematically stymied by Israeli policies.
They say their "constructive policy programme was not met with a similarly positive and forward-looking response from Israel."
And they warn that uneven development in the Palestinian territories has created "frustration, hopelessness and fragmentation of Palestinian politics and society."
Israel's submission to the so-called Ad Hoc Liaison Committee, which groups donors to the Palestinian Authority (PA), paints a picture of serious financial problems.
"The Palestinian Authority faces a financial crisis, caused primarily by the shortfall in foreign aid, growing arrears to suppliers and reaching the lending limit that the domestic banking system can sustain," it says.
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It says there was little development in the private sector, and the public sector remained the West Bank's biggest employer.
And it cited the "shortcomings of the PA's current fiscal management framework, which helped contribute to the present fiscal crisis."
"After three consecutive years of impressive economic growth in the West Bank, Palestinian Authority financial stability is now challenged," it warns.
The submission says Israel helped maintain West Bank growth and "made a substantial contribution" to helping Gaza's economy, claims rejected by the Palestinians.
Their report to the committee accuses Israel of hampering development efforts.
"The stalled peace process, on-going occupation and the separation of Gaza from the West Bank, including east Jerusalem, have engendered uneven development and service delivery across Palestine," the report says.
"This state of affairs, which fuels frustration, hopelessness and fragmentation of Palestinian politics and society, will soon terminally undermine the viability of the two-state solution."