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Our joint Palestinian-Israeli journal started publication over five years ago with an issue devoted mainly to "peace economics." This was in the period immediately following the 1993 Oslo agreement between Israel and the PLO. Now, after some six years of ups and downs in Israeli-Palestinian relations and negotiations, it is time to publish another issue on this topic - Peace Economics Revisited. This is the theme of most of the articles in the Focus Section.
There are two basic approaches to conducting economic relations between our two entities or states: integration or separation. In the past, from 1967 until Oslo, there was integration - albeit a totally inequitable one, which caused the Palestinians long-term damage: fiscal drain, infrastructure misdevelopment and restricted competition with Israel. See Gideon Eshet's paper on the unfair nature of relations between Israel and the occupied territories. Samir Huleileh maintains that, due to political and security considerations, Israel's policy on the ground was prejudicial to the spirit and letter of the Paris Protocol and damaging to the Palestinian economy. Whatever the way to be taken, the reconstruction and strengthening of that economy is an essential element in the peace process.
From its inception, the Palestine-Israel Journal has supported cooperation between Israel and the Palestinians; this has been reflected in the articles published on many aspects of the conflict over the years. Nevertheless, there are real economic issues to be decided, not only by the supporters of the Journal, but by the two entities. Professor Ezra Sad an illustrates the advantages to the Palestinians of "equitable integration" as the best solution, but he does not eliminate "second best" solutions. He concentrates on the labor market. Several writers have pointed out the relative size of the two economies, with that of Israel exceeding that of Palestine by a factor of twenty. The Palestinian economy is highly dependent on Israel for imports, exports of labor, services and infrastructure. Most of the writers here argue for Israeli aid and support f_C?~ .the Palestinian economy. Some of the writers see the ultimate aim cif tnt:d:>alestinian economy in the context of self-reliance and independence, while they support maintaining economic relations on a basis of mutual consideration and equity.
One important paper is the executive summary of the EPS Model (Economic Permanent Status), which is a joint project of the ECF (Economic Cooperation Foundation), on the Israeli side, and DATA (Data Studies and Consultation) and the HCIF (Higher Commission for Investment and Finance) on the Palestinian side. It was sponsored by the Government of Norway during 1998 and presents a model for long-term Israeli-Palestinian economic relations. One significant aspect is its "shared vision of political separation and economic cooperation, based on partnership for growth and development, especially of the Palestinian economy." The Model tackles the question of Jerusalem and states that it " shall be an open city and the freedom of movement between the two states shall be guaranteed." The EPS Model suggests a framework that is more cooperative than the free trade agreement model (FTA) and less integrative than the customs union model (see the round-table).
The annual Mideast conference (Casablanca) should bear more fruit now that there is some progress between Israel and the Palestinians and signs of progress with Syria and Lebanon. The peace process and the revival of a climate of investment go hand in hand.
In this context, the European Union is interested in a peaceful and stable Middle East in which it can, and will, invest. The support and external aid will help in the development of all the populations of the Middle East. Central to this is the development of closer political and economic relations between Israel and Palestine. This is the core of the Journal's approach in examining the economic aspects of the conflict and the need to move on from an unhappy past to a more hopeful future.

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