The Separation Barrier, for which construction began in 2002, has incited Palestinian anger and international criticism of Israel because its route cuts into the West Bank deep inside the Green Line, thus confiscating even more Palestinian lands for planned expansion of settlements. While it is true that the incidence of Palestinian suicide bombings has decreased in the years after construction on the barrier started, there are also other factors involved, so this wall is likely not the only reason for this decline.
There have also been intermittent cease-fire agreements between Israel and Hamas that have been largely observed in recent years. Also, partly due to the harsh and violent response by Israel to the suicide bombings during the Second Intifada, including incursions into Palestinian towns, the re-occupation of several Palestinian cities that had been under PA civil control for a few years as part of Oslo, the demolitions of hundreds of Palestinian homes, the arrest of thousands of Palestinians, bombing of some Palestinian cities, etc., suicide bombing may have decreased due to the fear of harsh collective punishment.
Another reason for the decrease in suicide bombings and other acts of terrorism emanating from the West Bank is that today, the overwhelming majority of Palestinians believe that suicide bombing and terrorism are not useful tactics--not only because they believe that targeting Israeli civilians is immoral and unethical, but also because it undermines the legitimacy of the Palestinian cause in front of the international community.
In addition to these factors, the barrier is still not complete in many areas, and many Palestinians have still managed to sneak across into Israel for work or other reasons. Thus, suicide bombers would likely also be able to do this if they were determined to, and yet they have not.
All of these reasons have played a role in the decrease in Palestinian suicide bombings after 2003, and it is impossible to know exactly how important each factor has been.
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For more information about the Separation Barrier, see B’Tselem: