There is no doubt that the Palestinian Authority (PA) can usher a state called "Palestine" into existence. There is nothing magical nor even particularly difficult about achieving the status of "state." Even the longest standing, most broadly accepted basic definition of statehood, The Montevideo Convention on the Rights and Duties of States, which dates back to 1933, establishes rather minimal requirements for state status.
The Montevideo Convention provides only four prerequisites. (1) A permanent population, (2) A defined territory, (3) A government, and (4) The capacity to enter into relations with other states. In practice these requirements have been further reduced. As a practical matter, a state can be said to exist when other states say it does.
Even when territorial limits are hazy, poorly defined or still in the process of being determined, an established state has the sovereign right to declare another entity has achieved the same status. This is also the case when a government is not fully formed, fledged, or functioning. All that is necessary is that other states recognize the new kid on the block. The recognition need not be universal. Nor does the new state need the recognition of any or all of the Great Powers to come into full, legal form.
History is full of examples of states being recognized long before they had achieved either defined borders or a fully functional government. (Recall that the US falls into this category.) History is also replete with examples of states and governments which were widely but not universally recognized or lacked recognition and acceptance by one or more of the contemporary Great Powers. (The US non-recognition of the Bolshevik regime in Russia or that of Mao in China did not make these two states sudden nonentities.)
A state need not be contiguous (pace Constitutional law professor and president Barack Obama) to be both recognized and viable. At its creation Pakistan consisted of two parts separated by more than a thousand kilometers of India. It was both recognized and (until the fruits of Punjabi racism and Islamabad's inefficiency matured) viable. Pakistan existed with its two disparate components because enough other states said it did.
To make it simple but without undue simplification: States come into existence when enough other states recognize its existence and enter into relations with it. That's all, folks. There is no need for UN action. While the General Assembly upon recommendation of the Security Council can extend membership to a new state, this is not required for the state to exist as both independent and sovereign.
All of this brings us back to Palestine. An increasing number of countries ranging from Brazil to Russia have extended some form of diplomatic recognition to the territory of Palestine as governed by the PA. As this tide gains force, it can be expected that most of the current membership of the UN will do likewise regardless of the well-intended but quite irrelevant counsel of President Obama.
By the old standards of diplomacy, this should mean that Palestine would come into existence as an independent and sovereign state. But, the old norms do not apply. There are two constraints which taken together render the old way inapplicable in this case. One of these is the Oslo Accords, which formed an agreement between Fatah and Israel. The PA is not mentioned. It couldn't be--it did not exist at the time. Nor was Hamas referenced. Only Fatah and Israel.
The sundry agreements which fall under the appellation of the frosty Norwegian capital sharply limit the ability of the PA to exercise jurisdiction over territory and persons alike. The Oslo agreements served to place the Palestinian territory under an ongoing form of Israeli suzerainty. To a major extent, the effect of the Oslo agreements was to put a diplomatic and political gloss on an underlying brute fact.
The brute fact was (and is) the Israeli occupation. Even if the territorial extent of full Israeli occupation has been reduced over the years, it still exists as the rock upon which the independence and sovereignty of the PA must founder.
The combination of the Oslo agreement and the fact of ongoing Israeli occupation renders the past experience with the process by which states come into existence nugatory. This dreary reality is well understood and publicly accepted by PA officials. They know that even if every country on the face of the globe extends diplomatic recognition, this will not change realities on the ground--as long as the US does not do the same.
Israel's stance in comparison is not central. There are precedents of states and governments receiving full diplomatic recognition even though they were under full or partial military occupation. Indeed, that was a key principle underlying the political integrity of governments-in-exile during World War II. It can be argued that by failing to end its long condemned occupation, Israel has created a Palestinian version of a government-in-exile which has a legitimate claim on the international community for aid in regaining its (temporarily) lost land.
The PA (particularly if Hamas is left out of the picture somehow) has a good case for UN intervention based on both the government-in-exile precedents and international law generally. Assuming the UN General Assembly took some sort of action equivalent to extending full membership to the PA controlled Palestine, so as to duck any US veto in the Security Council, would it really matter with respect to the larger and more important question--peace?
The short answer is no. An independent Palestine would still have to deal directly with Israel regarding all the critical matters such as borders, land swaps, an Israeli military presence in the Jordan valley, the status of Jerusalem, and the return of Arab refugees. These matters would be no less contentious and vexing should Palestine become an independent state than they are right now.
The best which could be asserted about potential benefits to the PA is it would have some additional diplomatic leverage. As an independent state Palestine could be more effective in opposing additional growth in the Israeli "settlements." As an independent state Palestine could sign on to the Statute of Rome giving it the right to seek prosecution of purported Israeli war criminals before the International Criminal Court. This threat would have great leverage in and of itself.
A well coordinated use of mass mobilization of Palestinians in a move on the Israeli Wall and checkpoints along with diplomacy could bring about the desired UN action without US support. Indeed, it is hard to see how the combination of non-violent mass action and diplomacy could be openly opposed by the Obama administration given the coming of the next election.
The reconciliation between the PA and Hamas has shored up the political base of Abbas. Now if he and his fellows can show a modicum of smarts in orchestrating global opinion and the photogenic appeal of a series of totally non-violent marches on the Great Wall of (specious) Security behind which Israel cowers, he can pull off the coup of the decade--and mousetrap the Obama "team."
The record of the Palestinians in the theater of global politics and the realities of international diplomacy has more often than not been one of dismal incompetence and self-inflicted defeats. But, sometimes all it takes is one successful attempt at swinging for the fence. This time Abbas may do it with the result that Palestine will come into existence.
But, this may well not lead to peace. And, one cannot expect the Palestinians to make it two-for-two. That would take Elohim and Allah working in perfect harmony. Anyone want to make a bet?
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