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Direct talks between Israel and the Palestinians are still not taking place, but the indirect conversation is crystal clear. Take the decision of Palestinian Prime Minister Salam Fayyad that, from next year, Palestinians will be banned from working in the settlements. This is an impetus not for the peace process, but for an economic policy.

An estimated 22,000 Palestinians currently work in the settlements, of whom 11,000 are in construction, 8,000 in industry, and about 3,000 in agriculture.

The Palestinian argument is not new. The settlements strip the Palestinians of resources and their factories represent competition. The novelty lies in Palestinian legislation, a continuation of the decision to boycott products from the settlements. Likewise, the proposal aspires to disengage the economy of Palestine from that of the settlements. For Fayyad, the paradox in which the Palestinians are building the settlements and enabling settlement production cannot go on.

Israeli industrialists and contractors were predictably quick to cry foul. How is it possible to maintain the settlements without cheap labor? If Israel wants to stick with its settlement policy, it must tell the public to pay up. The bill is already on the table. In exchange for every Palestinian worker who will leave, the settlers are asking for NIS 2,000 in compensation to make up the wage difference between an Israeli and a Palestinian worker. That adds up to NIS 44 million for industry alone, with farmers and building contractors waiting in line. This sum covers more than the social benefits paid to Israeli employees and not to Palestinians; some of it is meant to serve as a "bonus" to lure Israeli workers.

But beyond exposing the wage gap between Israeli and Palestinian workers, and the new tax Israelis will be asked to pay the industrialists and contractors in the territories (who had it easy ), the Palestinian decision must raise a few more questions.

The departure of the Palestinians from the settlements and the entry of Israelis in their place means a rise of about 20,000 settlers. If this includes their families, the number of Israeli labor migrants to the West Bank will reach 60,000 to 80,000 persons, increasing the number of settlers living in the territories by 20 to 25 percent.

On the face of it, the Palestinian Authority should keep the Palestinians working in the settlements so they will not grow, but nationalist Palestinian logic appears to override this view. Whoever demands the settlements be removed cannot, at the same time, earn a living from them.

Israelis should see this phenomenon as troubling, both for the left and the right. Both are interested in encouraging "Hebrew" labor. But the left will have to decide whether this principle holds true for the territories, as encouraging Hebrew labor there means increasing the number of settlers. The right and economic neo-liberals will have to decide whether they are willing to see the government pay for such a move. If they oppose government intervention, the employers in the settlements may leave the settlements - as some have already done - and thus the number of work places in the territories will shrink, even for Israelis. The right could actually wind up encouraging the departure of the settlers. If they support compensation for employers, this will contradict the economic doctrine they support.

When the government is preparing to replace the workers in the settlements, as the industry, trade and labor minister has promised, why not implement the principle of compensation inside the Green Line? The answer is that inside Israel, the laws of economics are in operation while in the territories, ideology rules. For the same reason that Israeli governments ensured cheap housing for settlers, this government will ensure that employment at settlement factories is subsidized. Instead of Mohammed, the employee will now be Moshe.

It's hard to believe the PA decision has stirred any new thinking on the issue of government assistance to the settlements. We can imagine what could be done with the sums of money that will go to compensate employers in the territories and ask: Who is going to bear the brunt of the cost?