Tony Blair has unveiled the plan he has been working on for almost a year, largely behind closed doors, to rebuild the shattered Palestinian economy and, from there, to facilitate the creation of a new state.

Expectations are not high – Mr Blair treads where countless such plans have failed before, proposed by leaders with a far stronger mandate than his own, quite modest, remit, which limits him to infrastructure building. Low expectations, however, may help him deal with the obstacles he will doubtless face in implementing his project.

The plan, which Mr Blair says the Israeli security forces as well as Palestinian leadership are backing, allows for a gradual relief of key roadblocks across the West Bank. At the same time, Palestinian security forces will take over a large block of the northern West bank, which will also be targeted for investment projects, such as industrial zone funded by the German Government and Palestinian schools and other public amenities built in areas hitherto under Israeli control.

Mr Blair appears to be hoping that if it works, the Palestinians will be inspired to replicate the model, taking control of the West Bank bit by bit until the shape of a viable state emerges.

The plan is highly vulnerable though. A single Palestinian suicide bomber sent through a recently opened checkpoint will likely prompt the Israeli army to clamp down again. Hardline militant Palestinians would not hesitate to do so, as shown by a recent, deadly attack from Gaza on Israelis delivering oil to the fuel-starved coastal strip.

It also likely to be battered by the winds of political fortune as well. Mr Blair is working very closely with Ehud Olmert, the Israeli Prime Minister, who he says is determined to create a Palestinian state while the secular Fatah still retains its grip on the West Bank, having lost Gaza to Islamist Hamas a year ago. But Mr Olmert’s political future is looking increasingly shaky as he faces a searing corruption investigation.

Mr Blair himself, whose political charisma has been a driving force in gaining concessions from a reluctant Israeli military, may yet be lured away by the promise of a more rewarding job as head of the EU council. Finding a replacement of similar stature could prove difficult.

There are also fears that what Mr Blair may be doing, either deliberately or inadvertently, is to reinforce the de facto Cold War between Fatah-run West Bank and Hamas-controlled Gaza, holding out the prospect of a Marshall Plan for the former while effectively giving nothing to the latter. He has yet to visit Gaza, which has been tottering on the brink of total collapse for months. His contribution there has amounted to little more than sewage and water treatment facilities, while hospital generators are run on cooking oil to power emergency surgeries only.

Much depends on the will and ability of the Palestinian police in the West Bank to take on groups that many of their fellow citizens see as legitimate resistance fighters. Some Israeli commanders have insisted the only reason Hamas has not taken over the West Bank is because of the occupation, and may feel compelled to intervene if they receive intelligence of attacks being hatched, even if no strike is launched.

Israeli forces reserve the right to launch raids on potential threats inside the planned free zone: too many Israeli raids will erode Palestinian trust in their good faith, too few may result in a bloody attack that derails the process altogether.

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