It is billed as a symbol of the future Palestine: a modern, middle-class city of orderly streets, parks and shopping plazas rising in the hills of the West Bank, ready for independence, affluence and peace.
But the $800-million project has hit a snag: Palestinians say construction of the city of Rawabi depends on getting an access road, which can't go ahead without Israeli permission.
At a time when the latest U.S.-brokered peace effort is in crisis, the tussle over road-building is a test of Israel's willingness to give up much of the West Bank and allow Palestinian statehood to move forward.
Israeli Prime Minister Benjamin Netanyahu says he supports Rawabi's construction, but Jewish settlers and their supporters in the Israeli government, who oppose the very idea of Palestinian statehood, want the whole project scrapped.
Rawabi, some 20 miles north of Jerusalem, is one of many West Bank projects such as job-creating industrial zones and improved water supply that have similarly been held up. But perhaps none has the symbolic value of Rawabi, where builders envision 40,000 Palestinians enjoying the comforts of an American suburb, instead of crowded and disorganized towns and villages with poor infrastructure.
The city promises 1,000 pricey deluxe units and 5,000 homes for a growing middle class that can afford monthly mortgage payments of $400 to $700. There will be office and residential towers, a conference hall and hotel, shops, cafes, a cinema, mosques and a church. The view from the hilltop is a panorama of Palestinian villages and, 25 miles to the west, the Israeli metropolis of Tel Aviv on the Mediterranean.
Rawabi, which means "green hills," is a business venture by a Qatari firm, Diar Real Estate Investment Co., and West Bank-based Massar International. The U.S. government gave nearly $6 million dollars to plan a regional wastewater treatment facility, high-tech communications and street-paving.
The site was carefully chosen. It has no ancient religious relics for Jews and Arabs to quarrel over, and it lies in one of the Palestinian-administered areas of the West Bank where construction doesn't need Israel's permission.
Work crews broke ground on the site in January, to fanfare and predictions that the first residents could move in 2013.
Nine months later, bulldozers have carved some foundations and hillside roads, but little construction has taken place. Without the access road, builders say, the city isn't worth building.
The site now is reached by a a narrow, winding road through Palestinian villages, in parts too narrow for two lanes of traffic. But about two miles of the access road being proposed would have to cross an Israeli-controlled zone.
The Palestinian Authority asked Israel last year for jurisdiction over the strip of land needed, and senior Palestinian officials say Israel has repeatedly assured them approval is imminent. Israeli defense officials say they expect the road to be approved, but don't know when. All the officials requested anonymity before discussing the negotiations.
Many on both sides expect Rawabi to emerge as a bargaining chip in peace talks — suggesting the issue could drag on for years and turn investors off the project.
"On the political level, there is no progress on the road," said Bashar Masri, managing director of the company behind the project. "This is part of doing business while you're still under occupation."
Foreign diplomats involved in the process have expressed frustration, and former British prime minister Tony Blair, now an international Mideast envoy, has lobbied for a solution.
Israeli settlers, who generally want to see Israel retain the West Bank, say the planned access route crosses one of the roads they use. Their settlement of Atarot is less than a mile from Rawabi, and from Atara, the Palestinian village nearest to the site.
Aliza Herbst, a spokeswoman for the settlers' umbrella group, cited fears of drive-by attacks.
She said Rawabi would be "detrimental to the future of the security of Israel" and that she hoped the settlers' nearby road and communities would block its construction.
Members of Netanyahu's cabinet have also criticized the plan.
In a visit to Rawabi this week, Israeli Environment Minister Gilad Erdan, a member of Netanyahu's Likud party, said he would try to block construction of the road until the Palestinians explain how they will deal with the city's sewage and trash.
Masri, the manager, said developers had commissioned American, Israeli and Palestinian engineers to address all environmental issues. He said Israel was using the issue as a pretext, and Herbst seemed to agree, suggesting that anything that hinders Rawabi's rise is helpful.
"I'm really glad the road is there to prevent them from building that city," she said, speaking in English, "and yay for us that we have established those communities so that the problem exists."