The latest rift between the United States and Israel, which began with Israel's announcement of more planned construction planned in Ramat Shlomo - a Jewish-only neighborhood - that would further separate East Jerusalem from the rest of a future Palestinian state, distracts from the larger, even more inhumane separation that must be reversed if the Israeli-Palestinian conflict has any chance of being resolved peacefully. This is the separation between Israel and Palestine themselves.

The parties to this conflict must recognize that their futures are inevitably linked, in peace even more than in war, and that they already can establish cooperation, as equals under international law, with international partners, without forgoing national sovereignty. America's commitment to "confidence building" begins here.

Yes, negotiations cannot take place unless the sides are each attributed the right to self-determination; each side will exercise sovereignty after any agreement is concluded. But self-determination never meant that a nation does whatever it wants, without regard for the interests of others. In this context, the need for cooperation is especially urgent. The shared territory is very small, and more like one big megalopolis than two hermetically sealed states.

The need for mutual accommodation usually comes up when discussing security arrangements: demilitarization, safe passage to Gaza, and so forth. But this is only the beginning. There are scarce resources to be shared: water, the electromagnetic spectrum, natural gas reserves. Tourists will travel around what they'll need to see as a borderless territory. There will have to be reciprocal agreements on currency and labor law. There will be investments in what will seem like a common business ecosystem.

This is why the United States should seek to use its leverage to reduce tensions and mitigate grievances now, in advance of any final-status agreement, by reinforcing international conventions regulating state-to-state relations. These conventions would enable Palestinians and Israelis to advance their economies through a joint planning process. Why not establish an equitable foundation now in areas where progress is possible? Why shouldn't Palestine already enjoy the prerogatives of a sovereign state in fields that do not pose a security threat to Israel, especially where international conventions and bilateral modalities are clear?

Water is an ideal place to start, given its strategic importance in the region. What is keeping Palestinians and Israelis from applying international water treaties to water allocation? Israel already recognized Palestinian water rights as part of the Oslo II Interim Agreement. However, it has not implemented that agreement, and continues to deprive Palestinians of their fair share of water. On average, Palestinians receive less than 100 liters per capita per day, far less than the minimum availability of 150 liters recommended by the World Health Organization. The average Israeli uses 353 liters of water per day, while the average Israeli settler in the territories uses up to nine times what's available to a Palestinian. If the international community is sincere about incubating an independent and sovereign Palestinian state, why should this issue be deferred to political negotiations later on?

The same is true of electromagnetic spectrum. Visit Palestine's $350-million cell-phone company, Jawwal, which now faces legal competition from Wataniya Mobile, a joint venture of the Palestine Investment Fund and Wataniya Telecom from Kuwait and Qatar. From the roof of Jawwal's modern headquarters in Ramallah, what you see is disturbing. On one hill to the north is an Israeli settlement in Area C, with a cellular tower for Israeli operator Cellcom. To the south is another settlement with another tower. Cellcom gets about 10.5 megahertz of spectrum; Jawwal, 4.8. To get 3G and continuous coverage, which is what every Palestinian entrepreneur needs, you need an Israeli carrier. This conflict over bandwidth should be negotiated away now, and subject to the rules of the United Nations International Telecommunications Union - of which Israel is a member.

There are other ways of untangling the web of military occupation, including free trade zones, postal services and environmental protection. These should all be managed based on tested international models, such as the European Union's. Most important, perhaps, is access for Palestinian talent and foreign intellectual capital (such as investors, educators and doctors) to, and movement throughout, the occupied territory.

If progress is made on things like bandwidth, movement and access, will the classification of territory into areas A, B and C not seem obsolete? Moreover, if Israel and Palestine can build trust as two sovereign entities, will Hamas be enough of a reason to maintain the siege on Gaza, especially as Palestinian entrepreneurs from the West Bank prove able to bring hope there?

The challenge, in short, is to create dignified ways of becoming equals and partners in each other's lives. Postponing this invites new violence that will rip apart the fabric of both Palestinian and Israeli society. And who knows how the violence will spread? Rather, we must shrink the negotiating agenda to a manageable scale, whose end game is clear: two independent but interdependent states, living side by side. The United States, for its part, should build on its condemnation of settlements and establish international law as a reference point for immediate changes.

Sam Bahour is a management consultant and entrepreneur living in Ramallah. He blogs at www.epalestine.com. Bernard Avishai is an author and management consultant living in Jerusalem. He blogs at www.bernardavishai.com. (Published in conjunction with Common Ground News Service.)