Shortly after, the Palestinian National Authority was established and during the next 6 years formed a network of economic and security connections with Israel, being referred to as a fully autonomous region with self-administration.

In the year 2000, the relations severely deteriorated with the eruption of the Al-Aqsa Intifada – a rapid escalation of the Israeli–Palestinian conflict.

The Hamas takeover resulted in a complete rift between Israel and the Palestinian faction in the Gaza Strip, cancelling all relations except limited humanitarian supply.

[1] Israel maintains a strong currency and has the best protection of property rights of all the economic systems in the Middle East.

[3] In addition to agriculture, Palestine's main economic income is aid from the international community and Palestinian labor in Israel or other places.

[4] Joint economic cooperation between Israelis and Palestinians officials has experienced growth over the past years.

The company invested $15 million toward that end and drew in other major international investors and donors, including Microsoft, HP and Google.

Another possible project is a joint language center, where Israelis and Palestinians would teach each other Arabic and Hebrew, as well as aspects of their cultural heritage.

To date, the majority of them are outsourced workers, but Mellanox, a computer hardware firm, plans to hire 15–20 Palestinian engineers as regular employees.

According to Nader Tamimi, chair of the Association of Traditional Industries in the PA, there are regular interactions between Palestinian and Israeli businessmen.

The conflict is over whether or not Palestinians should be able to form its own separate country in government within a part of the land that is currently controlled by Israel.

Palestine, in the years before 1948, was a piece of land surrounded by the Jordan River, Egypt, the Mediterranean Sea, Syria and Lebanon.

The continual conflict between Israel and Palestine regarding their inability to acknowledge the other's claims to territory has resulted in many years of violence and instability in the region.

The Israeli government has created and distributed areas to expand Palestine's trade system, which includes import/export passages, information, specific economic sectors and transportation.

The Israeli government has promised to provide risk insurance and long term visiting permits to the Palestinian investors.

[citation needed] The continuously increasing transactions led to the creation of the joint Palestinian and Israeli initiative, the Jerusalem Arbitration Center (JAC).

The World Bank Country Director for West Bank and Gaza Steen Lau Jorgensen has stated, "Without immediate action by the Palestinian Authority, donors and the Government of Israel to re-vitalize the economy and improve the business climate, a return to violence as we have seen in recent years will remain a clear and present danger.

[16] Activists in Abbas' Fatah movement countered it by enforcing a boycott of goods made by Israeli food companies.

The unrest was a result of Palestinians’ resentment over heightened Israeli intrusion on the al-Aqsa mosque compound in Jerusalem.

A UN spokesman denounced Israel's actions on the matter, and stated that UN Secretary-General Ban Ki-moon "would find that the apparent excessive use of force by Israeli security forces is also troubling and demands serious review, as it only serves to exacerbate the situation, leading to a vicious cycle of needless bloodshed.

[23] The amount of fresh water that flows in the Jordan River as well as the Dead Sea has significantly declined as a result of this diversion.

After the 1967 War, Israel seized the West Bank from Jordan and began to regulate water usage in the area.

The treaty was not meant to set permanent precedent; rather it was made as an interim period so that by its end, more concrete measures could be taken.

[20] The averages in both areas as well as in surrounding Arab countries have steadily declined since 1967 due to the effects of climate change.

[30] Under the Oslo II Accord, 80% of water from the above named sources goes to Israel, and 20% to the Palestinians living in the West Bank.

Experts have argued that water laws ought to be more concrete though this seems difficult because of the variation in each geographic space and each political situation.

These rules rely on five principles: "reasonable and equitable utilization, avoidance of significant harm to other users or states, advance notification, consultation and negotiation, exchange of information, peaceful settlements of disputes.

[32] On 17 March, the Defense Ministry tightened restrictions on Palestinian workers, limiting entry to those working in essential sectors, and requiring that they remain in Israel instead of commuting.