After a day of diplomatic effort and supposed ceasefire, peace appears as far away as ever

Two weeks ago, at a major high-tech exhibition in Tel Aviv, Mr Ibrahim Barham, head of the Palestinian Information Technology…

Two weeks ago, at a major high-tech exhibition in Tel Aviv, Mr Ibrahim Barham, head of the Palestinian Information Technology Association, was one of the guests of honour.

His presence was merely the latest proof of the interdependency of the Israeli and Palestinian economies. Two weeks later, the notion that such interdependence could prevent the collapse of Israeli-Palestinian relations is in tatters.

For about the third day in succession, as an array of diplomats including Britain's Foreign Secretary, Mr Robin Cook, flew in and out, the number and intensity of clashes yesterday was far lower than last week. But few on either side doubt the potential for further escalation - especially with a Hamas "Day of Rage" again scheduled for tomorrow.

Both sides are suffering. There is already said to be a cooking-gas shortage in the West Bank. Container ships are being blocked by Israel from reaching Palestinian ports. Only a few thousand Palestinian labourers are coming to work in Israel. Tourism is in free fall.

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Mr Shimon Peres, the former prime minister and one architect of the collapsed Oslo peace process, worked for years to encourage the establishment of "business parks" along the border between Israel and the West Bank. But Mr Peres, a Nobel peace laureate along with the Palestinian leader, Mr Yasser Arafat, is now in Europe, despatched by Prime Minister, Mr Ehud Barak, to counter the images of a brutal Israel killing Palestinian youngsters.

His fellow Oslo architect, Justice Minister, Mr Yossi Beilin, is hinting at resignation after Mr Barak apparently made an informal offer to Likud opposition leader, Mr Ariel Sharon to join an emergency government - an offer Mr Sharon rejected.

As Mr Cook publicly mourned the failure of peace negotiations that were "so close" to fruition a lengthy gun-battle erupted between Israeli soldiers and Palestinian gunmen near the West Bank town of Nablus after Palestinians stoned a bus carrying mourners to the funeral of Rabbi Hillel Leiberman, who was shot dead at the weekend on his way to retrieve religious artifacts from Joseph's Tomb. A 12-year-old Gaza boy lay brain-dead in hospital, hit by an Israeli bullet on Tuesday night. A Palestinian teenager was shot dead in clashes outside Tulkarm. And a Jewish man was run over and killed near the West Bank settlement of Eli, in what the Palestinians said was an accident.

Mr Marwan Barghouti, head of the paramilitary "Tanzim" fighters in the West Bank, confirmed receiving orders from Palestinian Authority President Yasser Arafat to cease fire on Israeli targets. President Clinton was still trying to broker a peace summit - despite a firm no from President Mubarak to the idea of Cairo playing host. Mr Barak was again appealing for calm. It was a day of diplomatic effort, of supposed ceasefire. But the three further fatalities moved the death toll into the 90s. Peace, and partnership, seemed as far away as ever.