With Mahmoud Abbas and his Palestinian Authority returning home after submitting their arguments for statehood at the United Nations General Assembly, the Obama Administration is facing calls from Israel’s supporters in Congress to consider cutting off financial assistance to the Palestinians.

The position in Washington, peddled by both the White House and legislators, is that international recognition of a Palestinian state will not, in fact, result in what that the Palestinian people have been hoping for since the beginning of the Israeli occupation in 1967.

The lives of Palestinians in the West Bank and Gaza — which have improved over the past few years thanks to a concerted and noble state building effort by Prime Minister Salam Fayyad — will still be the same, with or without United Nations support. Security checkpoints will still be present and movement between the West Bank and East Jerusalem will still be monitored heavily by the Israeli military. Therefore, as far as the United States are concerned, the Palestinian Authority should not waste its time appealing to the United Nations Security Council and instead resort to direct negotiations.

The viewpoint of the United States Congress, shared by Democrat and Republican, has been more extreme than the White House’s.

As the branch of the United States government that controls the purse strings, the Congress had threatened to reevaluate its financial assistance to the Palestinian Authority if it decided to seek recognition of statehood at the United Nations.

The House of Representatives was explicit this summer in its denunciation of Abbas’ UN campaign, voting against it by an astounding 407-6 margin.

The Senate Appropriations Committee got into the game late but followed the House version up with a measure that would not only cut Palestinian funds but reserve open the option of shuttering the Palestinian office in Washington. A few months earlier, 29 senators wrote to President Barack Obama calling for a complete cutoff of American aid if the Palestinian Authority allowed Hamas — which the United States, Israel and much of Europe designate as a terrorist organization — to join a national unity government.

The Israeli ambassador to the United States has gone further, saying that bilateral relations between Israel and the Palestinian Authority would be completely null and void if a state of Palestine is granted by the international community. As he put, “We have a lot of agreements with the Palestinian Authority, we have no agreements with a government of Palestine.”

The question is whether the Palestinians will buckle to any of these threats. From news coming out of Ramallah, the resounding answer would seem to be no. Abbas has made clear to President Obama, Prime Minister Benjamin Netanyahu and the Europeans that nothing but a last-minute peace plan would be too late for him to reconsider the bid. A final diplomatic push by two senior White House officials last week only succeeded in convincing Abbas that Washington’s positions are inherently wedded to Netanyahu’s peace agenda.

So, with the vote pending, will Israel and the United States actually decide to cut off all financial assistance to the Palestinian Authority? The $550 million in aid that the United States hands over to Abbas has added a significant lump of cash to Palestine’s statehood goals over the past two years. Prime Minister Fayyad, who took the lead in building the foundations for a state, has done wonders with the money. The Palestinian Security Forces are an increasingly professional bunch, cracking down on crime in their area of control and cooperating with the Israeli army on issues of mutual concern, including terrorism and Hamas. Economic growth has climbed in the West Bank, with the territory escaping the current economic recession and exceeding the growth of most other Arab states. Palestinian small business is thriving — though it could do a whole lot better if Palestinian products could be exported without restriction. The lawlessness and militia prone territory that was once a way of life has diminished to near nonexistence.

Taking this assistance and using it as a form of punishment may be ill advised. Palestinian lives are not the only ones that would suffer without sustained donor support. The security of Israel, which has depended heavily on a cooperative Palestinian security establishment and an efficient public services sector, runs the risk of being jeopardized. Setting the clock of West Bank stability back to the criminality and lawlessness of the Arafat era is a lose-lose scenario for all involved in the region.

Holding tax receipts that are destined to go to the Palestinian Authority — a measure that Israel has hinted it would use if Abbas’ statehood bid is successful — would do just that, compounding the Palestinian administration’s already burdening set of administrative problems. If the PA is struggling to pay its workers now, imagine the frustration that government employees will feel once the aid spigot is turned off.

The problem could perhaps be managed if Arab states were able to increase their own contributions in the event of a Western cash retreat. But considering the Gulf’s poor record of maintaining its current commitments, striking that balance is more of a hope than a practicality.

While the West Bank economy has grown, it has done so partly thanks to donor assistance from the United States, Europe, and the Arab world. Withdrawing that money would severely hurt Palestine’s progress, and according to the World Bank (PDF), threaten the economic growth and public administration improvements that have been made since the statehood plan was developed. Donor contributions to the Palestinian Authority have already been far lower than expected over the past year, which has had the unfortunate affect of contracting annual Palestinian growth from the projected 9 percent to 7 percent. Aggravating that situation further would be detrimental and, as the World Bank put it, “may undermine the promise of these institution building achievements.”

Israel wants a secure West Bank to its east and a secure Gaza Strip to its west. Palestinians want a termination of the occupation and the status of a normal nation. Palestinian growth helps both of these causes. Withdrawing aid out of spite would hurt everyone’s interests and make the United States an active partner in the suppression of Palestinian self-determination — just as millions of Arabs are recapturing self-determination themselves.