A country need only fail on one of the eight criteria to not meet the definition of independent country status.
Palestine (and I shall consider either or both the Gaza Strip and the West Bank in this analysis) does not meet all eight criteria; it fails significantly on one of the eight criteria...
1. Has space or territory that has internationally recognized boundaries (boundary disputes are OK).
Somewhat. Both the Gaza Strip and the West Bank have internationally recognized boundaries. However, these boundaries are not legally fixed.
2. Has people who live there on an ongoing basis.
Yes, the Gaza Strip's population is 1,500,202 and the population of the West Bank is 2,407,681 (as of mid-2008).
3. Has economic activity and an organized economy. A country regulates foreign and domestic trade and issues money.
Somewhat. The economies of both the Gaza Strip and the West Bank are disrupted by conflict, especially in Hamas-controlled Gaza where any fledgling industry or economic activity is not possible. Both entities utilize the new Israeli shekel as their currency.
4. Has the power of social engineering, such as education.
Somewhat. The Palestinian Authority does have social engineering power in fields such as education and health care. Hamas in Gaza also provides social services.
5. Has a transportation system for moving goods and people.
Yes; both entities have roads and other transportation systems.
6. Has a government that provides public services and police or military power.
Somewhat. While the Palestinian Authority is permitted to provide local law enforcement, Palestine does not have its own military. Nonetheless, as can be seen in the latest conflict, Hamas in Gaza does have control of a extensive militia.
7. Has sovereignty. No other State should have power over the country's territory.
Somewhat. The West Bank and Gaza Strip do not yet have full sovereignty and control over their own territory.
8. Has external recognition. A country has been "voted into the club" by other countries.
No. "Palestine" itself does not have external recognition nor does it have its own embassies in other independent countries. It is not possible for Palestine to be an independent member of the United Nations at this time.
Thus, Palestine (nor the Gaza Strip nor the West Bank) is not yet an independent country. The two parts of "Palestine" are entities that, in the eyes of the international community, have yet to develop or, more importantly, have international recognition to be considered a full independent country.
