A Palestinian-American billionaire says the biggest challenge facing his $1.4 billion luxury city in the heart of Palestine nearly bankrupted the project - and it's still not over

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  • Rawabi is the first planned city in the West Bank built by and for Palestinians.
  • The $1.4 billion project is the brainchild of Bashar al-Masri, a Palestinian-American billionaire. Masri hopes the city can form the economic backbone of the nascent Palestinian state.
  • Masri told Business Insider that the biggest obstacle to building Rawabi was Israel's occupation of the West Bank, which meant that he had to lobby for years to get the city approved for roads and a water supply.

Palestinian-American billionaire developer Bashar al-Masri is the brains behind Rawabi, a $1.4 billion planned city of 40,000 in the West Bank, the territory home to 2.6 million Palestinians.

Around 4,000 of a planned 40,000 people currently live in the shiny new city, which is both the first planned city built by and for Palestinians in the West Bank and the largest private sector project in Palestinian history.

Though it remains to be seen whether Rawabi will become the thriving, bustling metropolis of Masri's dreams, the development is already a success. Getting a Palestinian project of that size completed in the West Bank is no easy feat.

But as Masri told Business Insider in a recent interview, the biggest challenge he faced in building Rawabi was the realities of "the occupation."

While Rawabi is located in Area A of the West Bank, the 18% of the territory under full Palestinian control, access to the city is in Area C, the 60% of it under Israeli military control. That left Rawabi at the mercy of the Israeli government for approval for infrastructure like roads and water.

First, Masri had to lobby to get permission to build an access road to bring materials to the construction site and then for a road to allow residents and visitors to go to Rawabi. It took years to get the road approved. Even now, the city only has a dinky two-lane country road that winds through vineyards.

The development has a temporary permit for the road, which must be renewed annually. If the Israeli government does not renew the permit, the road would have to be destroyed, Jack Nassar, a Rawabi spokesperson, told Business Insider.

Rawabi's water became a political football

An even bigger issue was water access.

"This is a story of defying the occupation, and a story of how this project is not just about economics. It's about the situation here," Masri told Business Insider

When Israel took control of the West Bank over 50 years ago, it took control of the water supply as well. The 1993 Oslo Accords dictated all water agreements had to be approved by a Joint Water Committee established between Israel and the Palestinian Authority. But in 2010, the Palestinian Authority decided that it would no longer participate in the JWC because it did not want to approve water infrastructure to Jewish settlements in the West Bank. In return, Israel refused to approve new water infrastructure for Palestinian communities.

At the time, Masri was optimistic that Rawabi would be approved, despite the tit-for-tat difficulties. But then, the other shoe dropped.

"We had 200 meetings with Israeli authorities about the water. Everything was lovely and dandy. All of a sudden, in April 2013, we said, 'Where's the pipeline? Let's go,'" Masri said.

Through back-channels, Masri found out that Israeli officials were holding the approval for Rawabi's water to punish the Palestinian Authority for forming a unity government with Hamas, the Islamist group that rules the Gaza Strip.

But then that issue passed and still Rawabi was not approved for water. Rawabi's first few hundred residents were ready to move in to the development, but without water approval, it was impossible. The Israeli government gave no indication when or if water would be approved.

"We're on the verge of bankruptcy. It has permanently devastated the project financially," Masri told The Washington Post at the time.

Masri lobbied the Israeli government for a year to no avail. By early 2015, apartment buyers were starting to pull out. Elections were due to be held in Israel that March and Masri said he heard from government sources that no one was interested in approving water to Rawabi so close to an election.

Rawabi is not popular with the settler movement, a powerful bloc of Israelis who have established communities on lands within the Palestinian territories. A headline of a column in the pro-settler Arutz Sheva news organization at the time conveys the sentiment: "Qatar-Funded City to Arise in Israel; More Tunnels, Anyone?"

High-profile domestic and international figures and US Jewish groups lobbied Israeli prime minister Benjamin Netanyahu to approve the water supply. In March 2015, Netanyahu gave in and Rawabi was approved for a temporary water supply of 300 cubic meters per day. That's enough for Rawabi's first 5,000 residents.

But Rawabi's difficulties are likely far from over. With 4,000 people already living in the city, it won't be long before Masri and his cohort have to renegotiate.

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