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The media atmosphere over the last few days has been reminiscent of the Oslo-era euphoria, or the early days of Ehud Barak's government. In the wake of Azzam Azzam's release, there is once again talk of cooperation, public embraces and peace conferences. International diplomats are once again viewing the Israeli-Palestinian conflict as an arena for diplomatic successes instead of a guaranteed recipe for frustration and failure.

The current situation, in which the Palestinians are awaiting elections and Israel is preparing to evacuate settlers from Gaza and the northern West Bank, is convenient for everyone. It is possible to make cheap "gestures" without endangering genuine interests or making concessions on substantive issues. But this waiting period will not last forever. When it ends, and negotiations between the Sharon government and Yasser Arafat's heirs begin, the real problems will come to the fore - and then, a rude awakening can be expected.

Over the last few months, Israel has conducted indirect negotiations with the Palestinian Authority over the economic arrangements to be instituted "the day after" the disengagement, using the World Bank's representative in the territories, Nigel Roberts, as a mediator. It is worth studying the lessons of these negotiations before resuming direct dialogue. The World Bank's report, published last week, reveals the depth of the differences in the two sides' attitudes and interests.

The Palestinians are guided by a permanent fear of "the mu'amra," the plot, which Israel is devising in order to imprison them once and for all in "bantustans" in the West Bank and Gaza Strip, separated and surrounded by a network of settlements, checkpoints and the separation fence. They discern the footprints of this mu'amra in every Israeli action in the territories since the Oslo Accords were signed, including the suggestions Israel raised in the economic talks, such as the construction of winding roads in the West Bank that would distance the Palestinians from the settlements.

To counter what the Palestinians term the Israeli plot, they cite international law and the Oslo agreements. They insist on implementation of the interim agreement, including articles that were never carried out in the past, such as the "safe passage" between the West Bank and Gaza.

The Israelis fear that the Palestinians will exploit every loophole and pretext to dismantle the security envelope and the economic separation that prevent terror attacks in Israel's heartland. Israel's approach to the talks was that the goal should be maximum separation between the two populations and the two economies, which would require the dilution of previous agreements.

The Israeli position, given to the World Bank following Arafat's death, was that the Oslo agreements are indeed valid but that it is clear that the disengagement plan will make parts of them irrelevant. This Israeli declaration, the bank's representatives concluded, indicates that Israel does not intend to revive those sections of the agreements that were never implemented.

Israel's attitude toward the Oslo agreements is ambiguous. A disagreement arose during the talks regarding the status of the territory Israel plans to evacuate in the northern West Bank, which is currently defined as Area C, or full Israeli control. The Palestinians, supported by the World Bank, want this territory to be defined as Area A, in which the Palestinian Authority has full civilian and security control. But Israel announced that it does not intend to reclassify the evacuated territory, apparently so as not to revert to the hated Oslo map. Instead, the area will remain in a form of legal limbo. Yet at the same time, Israel is trying to cling to other parts of the Oslo agreements that it finds convenient - such as the arrangements governing voting by East Jerusalem residents in elections in the territories.

All of these questions, and even harder ones, will arise with renewed force once direct negotiations begin. Israel will presumably be generous with symbolic gestures. It might even call Mahmoud Abbas "president" of the PA if he wins the elections, rather than "chairman," as it used to call his predecessor. But that is not enough. The leaders of both sides will need a great deal of political will and ability in order to jump over the potholes of suspicion and lack of trust and lead the dialogue toward genuine results. When the time for unilateral gestures ends and the bargaining begins, this will be no easy task.