For now, the store owners are smiling in Nablus, a city usually known for its violent uprisings, armed gunmen prowling the streets and hard-hitting clampdowns by Israeli soldiers.

The economy is lifting off after Israel eased or removed the checkpoints ringing the city, a process also underway elsewhere in the West Bank. In a recent report, the International Monetary Fund forecast a seven per cent growth rate for the West Bank for 2009.

The average daily wage is up by 24 per cent. Trade with Israel has jumped by 82 per cent. Twice as many cars were sold in 2008 as in 2007. More than 2,000 companies have been registered with the PA in the past 18 months.

Storekeepers in Nablus’s casbah report 50-100 per cent increases in sales compared to just six months ago, much of that from Arab Israelis now allowed to drive into Nablus on Saturdays.

IDF officials say people are in the mood to make money, not to back attacks against Israeli targets. And they credit the ability and willingness of US-trained Palestinian Authority security forces to maintain order, enabling the army to loosen its grip on daily life.

“It’s a better feeling, when you sell more you are happier,” said Darwish Jarwan, whose store sells shoes, toys, clothes and perfumes, stacked in a way that covers a bullet hole dating back to an Israeli army operation in 2003. “Our prices are 20-30 per cent lower than in Israel, but a lot of the people come just because they love visiting Nablus.”

Still, Nablus residents are cautious. They recall a similar calm before the second intifada erupted in 2000 and say that the economic boost alone will not be enough to satisfy them.

“Buying and selling isn’t everything,” says Mr Jarwan. “We want our own country and to get our freedom. If the settlements continue I’m sure there will be another explosion.”

Another cause for caution about the future is the residents’ memories of maltreatment at the hands of the armed militants who enforced their own law in the city, including by demanding protection money from shopkeepers.

As part of its effort to take back the streets, the PA offered some of the gunmen posts in the police force and municipality. But some residents say it is unsettling to see the former gunmen in their new roles.

“It’s strange to see this man who used to terrorise me working for the municipality,” said one shopkeeper. “The authority did not punish them for what they did, it rewarded them.”

But he added: “During the past six months I did not hear of any violations by any of those people.”

The same shopkeeper noted that even though Hamas leaders are in jail in the West Bank, the Islamic movement, which swept the 2006 elections in Nablus, is still popular.

Another store owner said that some business had been lost for good. “Things are better on Saturdays when the Arabs from Israel come, but other days are still slow.

“Before the intifada people would come from all the villages around Nablus every day. But with the checkpoints, lots of shops opened in the villages, so they stopped coming. Now they can get everything in their villages.”

At Nablus’s brand new state-of-the-art cinema, the walls are adorned with pictures of Clint Eastwood, Charlie Chaplin and Egyptian stars. It is in a new mall that is mostly empty and at NIS25 a seat it is out of reach for many Nabulsis.

“Things are better,” says Farouk al-Masri, the owner’s son. “There is more security, police are keeping law and order, there are less Israeli incursions and less restrictions at checkpoints. The Palestinians from Israel who are coming have breathed life into the city.

“We’ve been living in this fear, being isolated and not being able to go in and out but now there is more room to move. You can now go to Ramallah in your car, something we hadn’t been able to do in a decade.”

The cinema, the first to show films in the city in 20 years, is currently showing an Egyptian romantic comedy, Omar and Salma.

“People love comedy here,” he said. “We showed one movie that was very bloody. People didn’t accept it and only a few came to see it. Blood — we’ve had enough of that.”