American think-tank looks ahead to Palestine, 2015

This is a vision of the future Arab state as set out by a $2m study by one of America's most prestigious think-tanks. What's more, the Palestinians love it, reports Donald Macintyre

It's a futuristic concept as stunning as it is implausible, under present conditions. A Palestinian businessman on the way to a meeting in Cairo steps on to a train at a clean, modern rail station in the northern West Bank city of Jenin - no longer ravaged by bloody conflict but peacefully booming with private-sector office and apartment construction.

The businessman is whisked by fast train to the busy Gaza airport, the latest Middle Eastern hub, in less than 90 minutes. On the way, he savours the changing landscape through the train window - the mountains of Jordan to his left, the Israeli Highway Six and the Mediterranean to his right. He notes with satisfaction the aqueduct which follows the path of the railway line and whose construction solved at a stroke the desperate water shortages that had been faced by his people. He watches the Western backpackers hiking through an olive grove on one of the new national park trails that wind through the West Bank farmland and forest in sight of the track.

Glancing at his watch he chuckles at the 10 minutes it takes to get from Nablus to Ramallah - a journey, he remembers, that in 2005 could have taken, thanks to Israeli checkpoints and road closures, half a day, supposing he had the papers to allow him to make it at all.

On his return journey he will stop off at east Jerusalem, now universally acknowledged as the Palestinian state capital, for one of his frequent visits to his ageing mother - a simple trip that was virtually impossible a decade earlier, made all the easier by the California-style urban rapid bus system that runs from every station on the line. As the train pulls into Hebron, the last stop before it reaches southern Gaza, he casts an expert eye - he runs a building firm himself - at the imaginatively planned new neighbourhoods, each with their own recreation spaces, many housing refugees who have returned from Jordan or Syria, clustered along the tree-lined boulevards which link the station with the city's ancient centre. With all this building, he thinks, no wonder it is difficult to hire skilled construction workers in a labour market that saw Palestinian unemployment soaring over the 60 per cent mark back in 2005.

It's an idea about as far away from present-day reality as it is possible to be. But it is no bedtime story. For it is almost exactly the vision which informs a new $2m (£1.1m) study produced by one of America's most prestigious think-tanks, the Rand Corporation. The two complementary reports are, in Rand's own words, the "most comprehensive recommendations ever made for the success of an independent Palestinian state".

This week Mahmoud Abbas flies into Washington for what will be George Bush's first meeting with a Palestinian Authority president. He does so at a time when, for all the dramatic, if far from entrenched, decline in violence since the Sharm el-Sheikh summit in February, the possibility of a negotiated peace deal to end the conflict and the occupation once and for all seem almost as far away as ever.

Whether or not that outlook can be improved by Thursday's talks, it is a safe bet that the well-worn term of a "viable Palestinian state" will be repeated incessantly as the formal goal of US foreign policy - and for that matter of the Palestinians and the Israelis themselves.

The Rand Corporation study cannot of itself bring that still painfully distant-seeming goal any nearer. But it can at least, and as never before, draw some of the contours of what such a state might look like.

At the core of the Rand proposals is the Arc, a 130-mile corridor running south through the West Bank, looping into southern Gaza - where the disused airport is - and then back up to Gaza City and the north of the Strip. It would, however, include not only the fast rail link, but also a water conduit, fibre-optic cable, power lines, and in recognition that not all freight and passenger journeys will be made by rail, a toll road and a linear national park. According to Rand its construction would provide between 100,000 and 160,000 desperately needed jobs over five years.

Rand hired Doug Suisman, an architect fromCalifornia, with a strong interest in publicly useful projects but no experience in the Middle East, to think from first principles about the future design of a Palestinian state that would work. Part of his brief came from the main donor for the Arc study, Guilford Glazier, an 84-year-old American property developer who had his own memories of the great Tennessee Valley Authority project begun in 1933 by Franklin Delano Roosevelt - a massive public project which delivered cheap hydro-electric power and irrigation while creating desperately needed work in the process.

Glazier wanted a specific problem addressed - how could the West Bank accommodate the return of perhaps hundreds of thousands of refugees and their dependants who had fled or been driven out of Israel in the 1948 war? One answer to that, in Suisman's blueprint, was the new neighbourhoods lining the boulevards which link the stations to the heart of each West Bank city. Such housing would add more than $2bn to the $6bn cost of the Arc itself. And that would be a fraction of the $33bn total cost over 10 years of the wholesale regeneration envisaged by Rand in its other report, Building a Successful Palestinian State.

Massive sums. Of course, you might think that the lasting prospects for peace that would be consolidated by a successful Palestinian state are pretty well without price. But in any case, Rand points out that the costs per head of population are only marginally more than the international community allocated for the first two years of post-war reconstruction in Bosnia.

Though tempered with caution, the reaction of the Palestinian leadership to the Rand ideas has ranged from positive to highly enthusiastic. At the weekend meeting of the World Economic Forum in Jordan - "Davos in the desert" - Rand experts met senior PA officials to discuss how to take the project forward and a meeting has already been scheduled in Ramallah in the next fortnight, at which Palestinian ministers will suggest some of their own modifications. Ghassan Khatib, the PA's planning minister, said he had concerns that because the Arc had been routed along the main eastern cities of the West Bank it largely left out what the Palestinian leadership regards as the key potential development triangle formed by Nablus, and to the west, Qalqilya and Tulkarem. He also said the plan had little to say about the collateral development impact in Gaza, which because of its huge population density - close to the highest in the world - would not, in the opinion of the Rand planners, be capable of absorbing any more refugees after any final peace deal. But Mr Khatib added: "We are looking at this from a perspective and we hope it can be incorporated into our own national planning." He said his ministry had some ideas to put to Rand which be believed did not "contradict their basic ideas".

The Rand studies have also ridden over some thorny political questions. The refugee assumption is clearly that returnees will come to the Palestinian state and not to their original family homes in Israel - long the formal demand of the PLO. This is counterbalanced by an assumption - fiercely contested by the Israeli right - that a portioned Jerusalem will be part of the Palestinian state, arguing, correctly, that "without a credible sovereign presence in Jerusalem, the new state of Palestine will suffer a serious legitimacy deficit among its people".

Since some disinterested observers believe that any future two-state deal would probably trade the joint status of Jerusalem for abandonment of a right to return to Israel, the Rand approach is unsurprising. But some Palestinian negotiating officials were also worried that Rand was silent on the Jewish West Bank settlements. Mr Khatib, however, said that he was assuming that since the Arc passed through parts of the West Bank currently populated by Jewish settlers, the plan meant that by the time it was enacted the territory would be "settlement free".

The whole point of the Rand study, however, is to move beyond the detailed, albeit vital, questions about borders to ones of how to sustain a Palestinian state. And in this it appears to have been a real success.

When Mr Suisman completed his initial presentation of the study in Ramallah, there was a long silence, broken by Jihad al-Wazir, the deputy planning minister, saying that he had "tears in his eyes". He said this week: "I was very moved. You know, you are dealing all the time with the nitty gritty of the conflict and then someone comes from LA who has a vision, who has thought out of the box."

Mr Wazir said the plan had a kind of "American naivety" which he implied might be just what was needed in envisaging the future Palestinian state. It would mean "improvements in social cohesion", opportunities for desperately needed investment in the West Bank and Gaza, "and a rail link which can be a symbol of national progress". Mr Wazir added: "I hope that we will move this forward and that it will start to become part of our planning perspective."

Given the present progress, or lack of it, in Israeli-Palestinian relations, the Rand Corporation blueprint of what a future Palestine could look like, seems like a fantasy, more Utopian than rooted in the grim political realities of a 37-year-old occupation. And yet it may be none the worse for that.

As the report itself concludes: "Our analyses are motivated by a firm belief that thoughtful preparation can facilitate peace. Certainly, when peace comes, such preparation will be essential to the success of the new state, as recent US experience in Iraq and Afghanistan illustrates.

"The vision described in this book should help Palestinians, Israelis, and the international community prepare for the moment when the parties are ready to create and sustain a successful Palestinian state."

It may be no more than a dream but true progress rarely comes without starting in a dream.