While Israeli officials say the water issue will be resolved soon, possibly within a week, Rawabi has already turned from a symbol of Palestinian entrepreneurship and state building into a cautionary tale of the perils of investing in the Israeli-occupied West Bank.

Aside from the water issue, Rawabi has still not received a permit to build a permanent road to the city, a small Palestinian enclave surrounded by Israeli-controlled territory.

“If we cannot achieve such a little request as getting water and a road for Rawabi, how can anyone speak of a massive economic plan for the West Bank?” Mr. Masri asked. He was referring to an investment plan of up to $4 billion that Secretary of State John Kerry announced last year as part of an effort to revive moribund peace talks.

Mr. Masri is facing a major cash flow crisis because he cannot collect the $70 million due from homeowners and mortgage banks for the first 600 apartments until they are delivered. Contracts for further construction have been frozen, and up to 700 of the 4,000 people working on the project could lose their jobs by the end of September.

Once the water issue is resolved, Mr. Masri said, it would take about four more months to complete construction, which began in 2011. In the meantime, he is urgently seeking additional funds from his partner in the project, Qatar, which has already put in more than $400 million, and from other financiers. But if that money does not come through and the project continues to slow down, “we will be totally shut down by early next year,” he said.