RAMALLAH A building frenzy that is transforming Ramallah's skyline is also consolidating its position as the de facto Palestinian capital.

Once a village outside Jerusalem, the West Bank city increasingly appears to be assuming the role marked out for East Jerusalem in the Palestinians' statehood plans.

Smart hotels and apartment blocks are rising from the hilly terrain, a new presidential palace is under construction and the Palestinians are building new ministries for their government rather than continuing to rent out office space.

The Palestinian Authority, based in Ramallah since it was set up in 1994, says such projects are cost-driven. Renting is expensive, it says.

But the symbolic importance is not lost on Palestinians who fear Israeli policies are driving a widening divide between them and the Holy City just over the hills to the south.

Establishing sovereignty over East Jerusalem remains at the heart of the Palestinians' national agenda. But the two-decade old peace process which they hoped would deliver them the city as part of a state is foundering.

Israel, meanwhile, has deepened its control over Jerusalem, which it describes as its “eternal and indivisible” capital, while Ramallah is deepening its roots as the Palestinians' administrative and economic hub.

The PA is building a complex that will house seven ministries. The work, more than half complete, is one sign of Ramallah's transformation into the PA's “eternal capital”, said Iyad al-Barghouti, a critic of PA policy on the issue.

TEMPORARY HEADQUARTERS New presidential offices are being constructed at the compound where Mahmoud Abbas and Yasser Arafat before him have presided over the limited self-rule ceded by Israel.

Work has started on a new commercial district, the Ersal Centre — a $400 million investment envisioned as becoming a centre for Palestinian banking and trade.

And this month, Abbas opened new Ramallah headquarters for the Palestine Liberation Organisation (PLO), which was headquarted in East Jerusalem in the years between its establishment in 1964 and Israel's capture of the land in 1967.

“God willing, the headquarters of the PLO will return to Jerusalem soon,” Abbas said at the Nov. 23 opening ceremony of the building, which the PLO is renting. “All of our sovereign headquarters are temporary. The time will come, God willing, to move all of them to Jerusalem,” Abbas said.

The Palestinians agree that none of their leaders can give up on Jerusalem, but their attachment collides with Israel's claim to a city that it has ruled for more than four decades.

After its occupation of Arab East Jerusalem in 1967, Israel annexed the newly captured part of the city, including the holy sites, together with a belt of surrounding West Bank land. The annexation has never won international acceptance.—Reuters