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BBC News Front Page | World | Middle East | Peace in the balance 

The conflict goes back to the proclamation of the state of Israel in 1948, the massive Palestinian refugee crisis which ensued and the capture of further territory by Israel in 1967. The long-drawn-out peace process has left the thorniest issues to last. Each side has defined a "red line" on these key "final status" issues beyond which it will not compromise.

  • Palestinian leader Yasser Arafat has threatened to declare statehood unilaterally if talks fail, although a date for such a declaration has been left up in the air.

  • Israeli Prime Minister Ehud Barak - whose possible re-election in February hinges on whether he can clinch a peace deal - has not ruled out Palestinian statehood.

  • Click the arrows to learn about the key issues
    The status of Jerusalem

    Israel captured East Jerusalem in 1967. It has proposed giving municipal powers to the 310,000 Palestinians who live there, while handing over some outlying neighbourhoods to full Palestinian control. However, Palestinians want the whole of East Jerusalem.

  • Ehud Barak says there can be no change in Jerusalem's status as a united city under Israeli sovereignty. But new proposals reportedly offer Palestinian sovereignty over a corridor through Arab East Jerusalem to the Harem al-Sharif - a site also sacred to Jews as Temple Mount.

  • Yasser Arafat says East Jerusalem must be the capital of a Palestinian state.
  • Click the arrows to learn about the key issues
    Borders of Palestinian state

    Palestinians say Israel must give up all the territory it seized in the 1967 war with Syria, Egypt and Jordan - in accordance with UN Security Council Resolution 242. These include the West Bank and the Gaza Strip, as well as East Jerusalem. Israel says it is prepared to give up some of these lands, but not all of them.

  • Yasser Arafat says Israel must obey UN Security Council Resolution 242.

  • Ehud Barak says Israel will never return to pre-1967 borders.
  • Click the arrows to learn about the key issues
    Jewish settlements

    Israel wants to annex three large blocs of West Bank land where some 170,000 Jews live in settlements. Palestinians say they do not object to some Israelis living under Palestinian sovereignty, but the settlements are illegal and an obstacle to peace.

  • Ehud Barak says a majority of settlers must be able to remain in the West Bank.

  • Yasser Arafat says the settlements must be dismantled.
  • Click the arrows to learn about the key issues
    Palestinian refugees

    Palestinians say Israel must allow four million Palestinian refugees living in camps in the West Bank, Gaza, Jordan, Lebanon and Syria, to return to their homes in Israel - in accordance with UN Resolution 194. Israel says it would contribute to a fund to compensate the refugees, but has ruled out their return.

  • Yasser Arafat says Israel must obey UN Resolution 194.

  • Ehud Barak says Israel cannot accept moral or legal responsibility for the Palestinian refugee problem.
  • Click the arrows to learn about the key issues
    Armed forces

    There are potential disagreements over security arrangements for the future Palestinian state. Israel wants it to be a demilitarised state without a formal standing army.

  • Ehud Barak says there can be no foreign army west of the Jordan river.

  • Yasser Arafat wants a Palestinian state to have armed defences.
  • Click the arrows to learn about the key issues

    Israelis and Palestinians rely for fresh water on aquifers that run through the West Bank. Israeli farms use large amounts of water for irrigation, while water is rationed in many Palestinian towns and refugee camps. Palestinians say Israel uses 80% of West Bank water, and must agree to share it more fairly.

  • Palestinians want more water, and control of the aquifers.

  • Israel says it cannot give up the West Bank land where the aquifers run.
  • Click the arrows to learn about the key issues
    Peace in the balancePeace in the balance
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