Palestinians - the second largest importer of Israeli goods after U.S.

Here are some economic implications for both Israel and Palestinians if total blockade on Gaza becomes a fact:

* In 2006, total Israeli exports to the 60 million or so residents of France stood at slightly more than $1 billion. Israeli exports to the same amount of people in Italy stood at just below $1 billion.

* But total exports to both of these countries, which rank among the eight richest countries in the world, are equal to Israel's exports to the 3.5 million people of the West Bank and Gaza Strip, according to the Central Bureau of Statistics. This is more than 6 percent of all Israeli exports, excluding diamonds. Despite all the intifadas, the Palestinian Authority is the second biggest customer of Israeli exports, after the United States.

If the blockade becomes permanent policy, Israel will lose a large part of its "captive market" - a stock phrase which in this case literally describes Gaza. "Israel benefited from its relations with the Palestinians," says Dan Catarivas, head of the foreign commerce branch of the Manufacturers Association and a former senior official in the finance and industry ministries. "And at the end of the day, it will lose if these ties are cut."

Whatever the 1.5 million people in Gaza need to live comes to them from Israel - from milk products to diapers, from medicine to cement. Even the humanitarian aid from international organizations is bought almost entirely from Israeli companies. Israeli firms also earn money as middlemen. Gas for cars is bought in Gaza via an Israeli intermediary at a tidy fee. About 5 percent of all freight that passes through the Ashdod port is earmarked for Gaza. This is to say nothing of the customs fees Israel is supposed to collect for the Palestinian Authority as part of the Paris Agreement signed in the 1990s, when everyone believed in a future of cooperation between Israel and the Palestinians. This money represents hundreds of millions of dollars that Israel put aside so it could eventually serve as a whip against the Palestinians.

An estimate by the Palestine International Business Forum shows that cutting off economic ties between Israel and the Palestinians would bring down the standard of living in the PA by one-third. Income per capita would fall to $500, the lowest in the Arab world, even lower than Sudan or Yemen.

Israel, according to this research, would lose around $2 billion per year. Some 76,000 jobs would be lost. Catarivas does not know whether these data are correct, but it is clear to him that Israel will be hurt. To his regret, he does not think that anyone really cares about this damage. "The system will adapt in the long run," Catarivas says. "Economic considerations will not have the upper hand over diplomatic considerations."

based on a report by Meron Rapoprt, Haaretz Correspondent