State formation is a complex process. Using the notion of the "ghetto state", the case of the West Bank and Gaza Strip are analyzed. State formation processes among the Palestinians are shown to be a direct reaction to the processes of political and military control put into operation by Israel since 1967. The continued administrative and political separation of the West Bank and Gaza from the dominant Israeli territory enable the Palestinians to formulate their own independent national identity. This includes the establishment of economic, cultural and local political organizations, providing the foundations for future statehood. Such organizational capability is indicative of the wide range of non-violent forms of power which, in many cases, are more effective than direct acts of violence against Israel. The Intifada - or popular uprising - which has been in operation since 1987 has enforced these processes of statehood formation, through its combination of both violent and non-violent forms of power.