Ariel Sharon declared at the United Nations last week that `the last Israeli soldier left the Gaza Strip, and military law there was ended… [this] allows the Palestinians… to develop their economy and build a peace-seeking society… free, law-abiding, transparent and democratic…`

But are the Palestinians really free to take full responsibility over Gaza? Palestinians claim that Israeli occupation and control has not ended, and that no real end is in sight.

Continued Israeli control over Gaza is now in the process of being negotiated though the good offices of Special Envoy James Wolfensohn. The gaps between the Israeli and Palestinian sides are quite wide on most of the issues. The chaos that ensued with the Israeli withdrawal has seriously complicated the possibilities for reaching agreements. The following is the status of the negotiations and the challenges that must be overcome:

The Rafah crossings. Several days prior to the IDF`s withdrawal the Egyptians announced that the Rafah crossing would be closed for about six months for renovations. This announcement took the Palestinians by surprise. The Palestinians believe this was coordinated between the Egyptians and Israel in order to force them to continue to move through Israeli-controlled crossings.

As a result of the Egyptian announcement the Palestinians proposed using Kerem Shalom, the triangle crossing point of Egypt-Israel and Gaza, as a temporary crossing until Rafah can be re-opened. The Palestinians intend to pressure the Egyptians to complete the Rafah renovations in far less time than six months.

Once the Rafah crossing is running there will be free movement of people out of Gaza under complete Palestinian and Egyptian control. Regarding movement of people into Gaza via Rafah, Israel agrees that Palestinians holding Palestinian ID cards will be able to move freely in both directions. Israel insists that Palestinians and others without Palestinian Authority issued ID cards (issued with Israeli approval) be checked through an on-line video surveillance system Israel would monitor.

Those people whose entry is challenged by Israel would be directed to the Israeli terminal at Kerem Shalom. The Palestinians have so far rejected Israel`s position.

Palestinians propose that goods entering Gaza go through Kerem Shalom in order to maintain the common customs envelope with Israel. This is a reversal of the position they have held since the signing of the agreement for a customs envelope in 1994. Israel, knowing that the Palestinians now want to keep the customs envelope, has told the Palestinians that without Israeli physical checks of all goods entering Gaza, Israel will close the customs envelope.

So the Palestinians gave in, though their interpretation of how Kerem Shalom will operate is vastly different from Israel`s, and this will be a point of contention in the coming days.

Palestinians reject any direct control and ability of Israelis to prevent the movement of goods. They thought they were agreeing to Israeli monitoring of Palestinian checks, far less than full Israeli control. This is not how the Israelis see it. Palestinians argue that continued Israeli control means the occupation has not ended.

The Gaza-West Bank crossing. In principle, an agreement has been reached that will establish movement through escorted convoys – buses for people and trucks for goods. The convoys would be escorted by the Israeli army. Arguments remain open about whether the IDF can arrest anyone on the buses after they enter Israel, and on the nature of the border checks.

Palestinians are demanding a `door-to-door` system, meaning that goods would be checked on the trucks and that the trucks would travel between the two points without being checked again. Israel prefers the `back-to-back` system, where goods are unloaded from the trucks, checked for security and then loaded onto other trucks on the Israeli side.

Back-to-back is costly and slow. Door-to-door requires sophisticated scanning technology that is not yet in place at all crossings, and trucks that can be sealed. The Palestinians do not have enough of those kinds of trucks. There are some other technical details such as the fact that engine blocks cannot be scanned.

THE GAZA seaport. Israel has given its approval for the construction of the Gaza seaport, but not to its operation. International donors willing to build the seaport want guarantees that Israel will not destroy the port in any future possible attack and will allow the port to operate.

Israel is not willing to give such guarantees. Israel knows that without its physical control at the port there is a real danger that weapons will be imported. The IDF still maintains a security belt around the territorial waters of Gaza and if it suspects ships containing arms are approaching Gaza, Israel will stop them from entering.

The Gaza airport. Israel has not give any sign that it is willing to have the airport reopened. In the meantime international donors have stated that they are willing to fund the reconstruction of the airport, destroyed by Israel at the beginning of the second intifada, and to construct a full cargo terminal.

THE DECISIONS made on these issues will determine the future of Gaza and perhaps the chances of a new peace process emerging. While Israel has declared that the military occupation over Gaza has ended in reality it remains in control of Gaza`s external borders – except the Gaza-Egypt border (for the time being).

The Palestinians claim that as long as Israel has control, the occupation has not ended and the Palestinians do not have sovereignty over Gaza.

Any chance to move forward toward peace must take the economic issues seriously. If Palestinians do not see a brighter future, Hamas will take over. Since disengagement Hamas has lost five points in the Palestinian polls, going down to 30%, with Fatah rising to 47%. These numbers will change rapidly if the hopes for a stronger economy do not turn into reality.

Economic prospects in Gaza are dependent on whether the Palestinian Authority is able to assert its control. For now they do not appear positive. The coming weeks will be crucial.

SIGNIFICANTLY, Israel, the Palestinian Authority and Hamas all share an interest in quiet – each for its own reasons. Prime Minister Ariel Sharon needs quiet so that the disengagement won`t blow up in our faces, as the opposition predicted. The PA needs quiet in order to build itself and to promise a victory in elections. Hamas needs quiet in order to actualize its chances of integration into the Palestinian political system.

Now Sharon has announced that Israel will not allow the Palestinians to hold elections with Hamas participation if the PA does not disarm the Hamas militia. Mahmoud Abbas has promised that the disarmament will happen only after the elections. If Israel insists on disarmament prior to elections, the balance and merging of interests will be derailed and chances are that a new round of violence will open.

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Gershon Baskin

Gershon Baskin is one of the most recognizable names in the Middle East Peace process. He is a political and social entrepreneur who has dedicated his life to peace between Israel and its neighbors. His dedication to creating a culture of peace and environmental awareness, coupled with his impeccable integrity, has earned him the trust of the leaders of all sides of the century old conflict. Few people have such far-reaching and positive impacts on promoting peace, security, prosperity and bi-national relationships. Gershon is an advisor to Israeli, Palestinian and International Prime Ministers on the Middle East Peace Process and the founder and director of IPCRI, the Israeli-Palestinian Public Policy Institute. He was the initiator and negotiator of the secret back channel between Israel and Hamas for the release of 1,027 prisoners – mainly Palestinians and Arab-Israelis of which 280 were sentenced to life in prison, including Yahya Sinwar, the current Palestinian leader of the Hamas in the Gaza Strip. The prisoners were imprisoned for planning and perpetrating various attacks against Jewish targets that resulted in the killing of 569 Israelis in exchange for one Israeli soldier, Gilad Schalit. Gershon is actively involved in research and advocacy concerning topics such as social policy, environmental security, political strategy, peace education, economics, culture and in the development of affordable solar projects with the goal of providing clean electricity for 50 million people by 2020. He is a founding member of Kol Ezraheiha-Kol Muwanteneiha (All of the Citizens) political party in Israel. He is now directing The Holy Land Bond and is the Middle East Director for ICO – International Communities Organization - a UK based NGO working in conflict zones with failed peace processes.