Even for those considered to be among the most successful Palestinian entrepreneurs, staying in business sometimes feels more like something you do on principle rather than for profit.

That's how it looks to Mazen Sinokrot, the chairman and CEO of a company that produces, among other consumer goods, cookies and candies. The state of conflict with Israel, particularly since the Al Asqa Intifada broke out seven years ago this September, has meant decreased access for goods and dwindling profit margins.

"We deserve to earn 10 percent a year," Mr. Sinokrot says. "But for what we are earning, if I just sell out my investment and put the money in the bank, I'd make more than I do maintaining the company."

Convincing him to keep the doors open despite such calculations, he says, are the 360 workers who would otherwise be out of a job, and the 2,000 people they support.

Substantial talks between the new Fatah-controlled Palestinian Authority (PA) and Israel may become a reality now that Hamas has split from the Palestinian government. In response, regional and international leaders are floating a host of ideas to jump-start an economic renaissance in the West Bank – one that many hope could pave the way to Israeli-Palestinian reconciliation.

Among the ideas, according to the Palestinian Economists Association, are the creation of industrial zones in the West Bank to absorb workers once employed in Israel, investing in agricultural upgrades, and building public transportation.

Other proposals recently raised include a joint tourism project among Israel, Jordan, and the would-be Palestinian state along the Dead Sea. Israel's plan for a "peace corridor" project, being promoted by Israeli President Shimon Peres, calls for produce from Jericho to be marketed abroad via Jordan and for the establishment of a new airport on the Jordanian side of the border.

But on the ground, Palestinian business leaders and economists say that the roads to recovery still run through too many Israeli checkpoints – or hit a wall altogether.

The high cost of checkpoints

Sinokrot, for example, used to send his driver from the family-owned factory in Ramallah to Nablus three times a day. Now he can make only one trip a day because of the copious amounts of time he can expect to spend at Israeli checkpoints across the West Bank.

"With what I have to pay for his same salary, I can only make one delivery a day, not three," he says.

And since Israel's disengagement from Gaza, he says, his company lost access to the coastal strip because of the increased frequency with which Israel closed its border crossings. Between 1998 and 2000, he says, about 3 percent of his turnover went to paying for logistics and distribution. Now, it's between 7 percent and 9 percent. The final result, he says, is that the cost of moving goods around is higher here than almost anywhere else in the world – about $4,000 for 50 miles of distance.

"It's a lot of money for consumer products, and it's being sold to a public that has lower and lower income levels each year," he complains.

Tony Blair's economic promise

Now, however, Tony Blair is hoping he can change all that. Mr. Blair, the former British prime minister recently appointed as a special envoy to the region on behalf of the Quartet (representatives from the US, the United Nations, the European Union, and Russia), is due to arrive by the end of next week, when he will set up shop in Jerusalem and work on promoting peace in large part through Palestinian economic recovery.

Among his goals for his first fall in the region: bringing together Israeli and Palestinian business leaders to invest in joint ventures and new industries in the West Bank. When it trickles down into job creation, the theory goes, the quality of life in the West Bank will vastly improve.

A year on, conditions here would stand in marked contrast, ostensibly, from the quality of life in the Hamas-run Gaza Strip.

While some think this might "force" Hamas to come around, other Palestinians harbor deep misgivings over this approach because it could spell an end to the dream of statehood in the West Bank and Gaza Strip as one territorial unit.

But the PA is already $600 million in debt to the private sector, a finance official here says, and international aid to help it pay up should come first.

Earlier this summer, Prime Minister Ehud Olmert, during a visit by US Secretary of State Condoleezza Rice, offered to remove West Bank checkpoints and ease travel restrictions. But there is little or no palpable change, in part because of Israeli military decisions that any quick loosening of controls would facilitate a new wave of Palestinian attacks on Israelis.

"Israel needs to facilitate the movement of goods and people," says Wadah Hamdullah, deputy director-general of the Palestinian Ministry of Planning. "If they don't do that, and just pour in a few thousand dollars, it won't make a difference."

Btselem, the human rights organization that tracks Israeli policy in the occupied territories, says in a new report that Palestinian travel has been increasingly encumbered since September 2000 and that Israel's network of checkpoints around the West Bank is becoming a systematic, illegal way to separate Israelis and Palestinians and is often unrelated to security.

In response, the Israeli Justice Ministry defended the travel restrictions and dismissed Btselem's claims. "Regretfully, the terrorist threat, which has cost the lives of more than 1,000 Israeli citizens, makes it imperative, in certain circumstances, to restrict movement in such areas," wrote Attorney Hila Tene in a statement issued Monday.

Israel's produce problem

Amid the other complications of trying to forge an economic recovery when so many big-picture political issues remain unsolved, Israelis and Palestinians are trying to work out an unusual trade agreement that would allow Gazan farmers to provide produce to Israel in the next year.

Starting in late September, Israel enters a shmita, or sabbatical year, a biblically mandated period requiring farmers to let their land lie fallow after six years of working it. Though the issue is the subject of much controversy, most rabbis have concluded that anything grown on Jewish farms in Israel is forbidden and nonkosher, but produce grown in Gaza, or elsewhere in the world, is fine to eat.

An Israeli army official says there are efforts to work out a way to coordinate such a trade plan directly with Palestinian farmers and merchants to avoid having any dealings with Hamas.