RAMALLAH, West Bank, Feb 10 (Reuters) - When an Israeli army convoy drives past a Palestinian traffic policeman at a downtown Ramallah road junction, drivers stuck in the rush-hour are reminded who really controls the West Bank.

Likewise when Israeli security forces raid Palestinian cities in pursuit of people they accuse of crimes, ranging from overstaying tourist visas to killing an Israeli settler.

The Palestinian Authority says it is time for Israel to end such incursions if it is serious about making peace.

Arguing that its own, overhauled security force can keep order, the Western-backed Palestinian government has urged Israel to stop entering parts of the West Bank which, according to interim peace agreements, should fall under its jurisdiction.

Nothing defines a state more than where its own security is, not where the security services of the occupation forces are, Prime Minister Salam Fayyad said at a conference last week, with Israel's defense minister among those listening.

Things need to begin to happen in order to give the suggestion that this occupation is going to end, he said.

Yet Israeli incursions are as routine as ever. If anything, they seem only to have increased in recent months, say Palestinian officials. Israel is pushing the Palestinian security forces into a corner, spokesman Adnan Damiri said.

When foreign statesmen visit, Palestinian security comes out in force looking very professional and well-armed, wired up to the latest communications gear and riding in new jeeps and big black American pickup trucks.

But when Israel wants to nail people on its wanted list, as it did in Nablus last December, the Palestinians are out of sight. The army killed three men accused of killing a settler in the raid, which was condemned by Palestinian officials.

That sort of embarrassment compounds a public image problem for Palestinian security forces seen by their domestic critics, foremost among them the Hamas Islamists who govern Gaza, as mere tools of Israel's West Bank occupation.

With American and European help, Palestinian security forces in the West Bank have been retooled in recent years. Reforming and rationalising security was one demand made of the Palestinians under a 2003 peace plan. Instead of close to 20 security agencies, there are now five. A European mission is helping to develop the police force.

Another team, led by a US general, supports a more robust police force trained next-door in US-ally Jordan.

The reform programme was only given real impetus in 2007 when Hamas routed the Fatah faction in the Gaza Strip, seizing control of the territory, which it still runs.

Defending the Palestinian Authority from any repeat of the Gaza-takeover is a main focus of the Jordan training, said one recruit who has been through the programme. He requested anonymity because he was not authorised to speak to the media.

The newly-trained force, so far numbering around 2,600, is only supplied with equipment approved by Israel.

PROTECTING SETTLERS?

Palestinian officials credit their security forces with what they say is an improvement in law and order in Palestinian areas. Crime is down. There are no gunmen on the streets of once lawless cities such as Nablus.

For Hamas, the outcome is an ever more efficient crackdown on its members in the West Bank. Hundreds are in jail.

They will succeed for a limited period of time, said Omar Abdel-Raziq, one of the Hamas lawmakers elected in 2006 legislative elections in which his group defeated Fatah.

The resources being pumped in are very great.

Israel has noticed the impact in the West Bank, one of the main fronts in the armed Palestinian uprising against Israel earlier this decade. It credits Palestinian security with helping to stabilise the territory.

Settler leaders say security has never been better in Judea and Samaria, Defense Minister Ehud Barak told the Herzliya conference where Fayyad spoke, using Israel's names for the land it has occupied since 1967.

This is the result of the work on both sides, he said.

Critics say any inference that the Palestinians are doing a great job protecting Jewish settlers exposes the deep flaw in the policy. This is land on which the Palestinians hope one day to establish an independent state, and if there a peace agreement it will have to be handed over.

Israel has not met its commitment under the peace plan to fully halt settlement growth in the West Bank.

Palestinian President Mahmoud Abbas has refused to resume negotiations with Israel until it does, leaving adrift his quest to negotiate the creation of a Palestinian state.

As Palestinian faith in the peace process dips lower, Israeli praise for Palestinian security forces signals a dangerous trend, said a former Palestinian security officer.

He declined to be named because he is still a senior Palestinian Authority employee.

I am worried that the average Palestinian security man will reach the conclusion that all he is doing is defending settlers, he said. It's unsustainable.

You don't know when they will rebel against the whole system. The Palestinian security man exists to protect the citizen. But where is the state? (Additional reporting by Ali Sawafta; Editing by Douglas Hamilton and Samia Nakhoul)