The argument for close economic cooperation between Israel and the Palestinian Authority has been one of the mainstays of the hope for coexistence engendered by the Oslo Accords. Even in the heyday of the peace process, some supporters of Oslo, including myself, expressed serious doubts about whether this was the right approach to a peaceful and equitable relationship between Israel and an emerging Palestinian state. The current breakdown in Israeli-Palestinian relations calls for a closer look at this issue.

Those advocating close economic relations between Israel and the Palestinians - the most vocal of them being former prime minister Shimon Peres - based their case on two arguments. First, close economic cooperation would create - on both sides, and particularly among the Palestinians - strong incentives for the continuation and
maintenance of the peace process. Second, economic inter-dependence between Israel and the Palestinian territories has become so close during more than thirty years of Israeli control of the West Bank and Gaza that economic separation is virtually impossible.

Both arguments are factually wrong, and those who promote them should admit it. The intention was laudable, but a deep and bitter historical national conflict such as the one dividing Israel and the Palestinians cannot be resolved by the allure of economic self-interest. Were this the case, Yugoslavia would never have disintegrated; India and Pakistan would never go to war with each other - and numerous similar cases could be cited.

The economic cooperation argument took the European Union as its model and, more particularly, the role of Franco-German cooperation in overcoming decades, if not centuries, of strife and conflict. Yet the analogy was misleading: Germany was totally defeated after l945, and the newly emergent democratic German leadership realized that they had to cooperate with France regardless of political differences if they wanted to be reintegrated into the international community. France, for its part, feared a resurgent German power, and wanted to have Germany as dependent on other European countries as possible. This is not the case in the Middle East.

MOREOVER, the whole idea of anchoring the EU on a bedrock of economic cooperation was premised on the fact that Western European countries are, more or less, at the same level of socio-economic development. When the EU admitted less developed countries, like Spain, Portugal, Greece, and Ireland, enormous subsidies were showered on these countries in order to bring them up to Western European standards.

Israeli GNP per capita is 20 times as high as that in the Palestinian territories; it is equal to that of Egypt, Syria, Lebanon, Jordan, and the Palestinian territories combined. A common Israeli-Palestinian economic space cannot be based on equal, horizontal cooperation, but only on a vertical, hierarchical relationship which, at best, would make the Palestinian state a virtual Bantustan on Israel's doorstep. One can see why Israeli industrialists were eager to have a cheap, non-unionized, docile Palestinian labor force at their disposal. It is more
difficult to understand why sophisticated statesmen, like Peres, thought this would create cooperation and mutual interest.

One has only to see what has been going on every morning for years at Israeli checkpoints like Erez to realize that this is not economic cooperation. Palestinian workers submit twice daily to lengthy and demeaning security checks by nervous Israeli soldiers who (justifiably) must treat every Palestinian as a potential terrorist. The ensuing humiliation and bitterness on the Palestinian side has hardly fostered trust - it has inflamed passions and hatred.

As long as the Palestinian territories were under Israeli occupation, Israel was responsible in some way for their population's well-being. But to argue, as some people still do, that this responsibility continues even now, and will continue even if there is an independent Palestinian state, shows how occupation has corrupted the country's consciousness. Israel is as responsible for Palestinian well-being as it is for Egyptian or Syrian well-being.

Obviously the economic situation in what will emerge, sooner or later, as a Palestinian state should be of concern. But plainly and bluntly, Israel does not owe the Palestinians a living. We owe them respect, recognition of their right to self-determination, and a moral commitment to create conditions in which Israeli soldiers will not kill Palestinian teenagers, even in self-defense. But the economic burden is not ours.

A PALESTINIAN state should be part of an Arab economic space. It is the rich Arab countries who should invest in the future Palestinian economy. They, not us (and not the West), should create the funds for infrastructure, economic development, housing, and reconstruction.

The one positive note that came out of the recent Cairo Arab summit was the Saudi call for an Arab Solidarity Fund for the Palestinians. This should have been created years ago, but given the nature of Arab politics, it has had to wait until now. Let us welcome the Arab voices which finally appear ready to put their money where their mouths are.

Some Palestinian leaders would like to have it both ways, and absurdly call any Israeli attempts at disengagement "apartheid." It is exactly the opposite: the Palestinians are entitled to a state of their own, and most Israelis are now realistic enough to know that this is what is happening.

If Palestine is to be a truly independent state, it should not be an economic ward of Israel, with up to 30% of its workforce employed here. This is not what independence is about. Independence also means self-reliance - or assistance from your kith and kin. Israel learned the meaning of Jewish solidarity during the crucial years of its development. The time has come for the Palestinians to draw on the funds of Arab solidarity; with oil prices the way they are now, this would not entail exorbitant Saudi or Kuwaiti sacrifice.

As the recent disturbances have shown, when nationalist and religious tempers flare, economic considerations take a back seat.

A current common Western fallacy sees the economy as the main basis of all political relationships; ironically, this is a sort of right-wing, quasi-Marxist determinism. Marx was wrong to subsume all human relationships under the
hegemony of economic considerations: neo-liberal Western market prophets are equally wrong.

When an independent Palestine, supported and subsidized significantly by Arab money, achieves such economic progress that it is nearer to Israel in standards of living and economic development, then, and only then, will there be room for equitable economic cooperation between the two societies based on mutual respect and equal terms. In the meantime, Israel must wean itself from the quasi-colonial relationship it has developed with the Palestinians - and the Palestinians themselves, who justly crave political independence, should equally
emancipate themselves from economic dependency on Israel.

The writer, professor of political science at the Hebrew University of Jerusalem and former director-general of the Ministry of Foreign Affairs, is currently visiting scholar at the Carnegie Endowment for International Peace in Washington, DC.