1.  Borders & Territory
2.  Language
3.  The borders between Palestine and Israel shall be the June 4th 1967 Line, though the two parties may agree to boundary modifications that are minor, reciprocal and equal (in size and objective value) and that do not affect, among other things, territorial contiguity and water interests.  

Palestine and Israel each shall exercise full sovereignty over their respective territory, including all their airspace, maritime and land borders, and including their natural resources, in accordance with international law and norms. OR

1.  Palestine shall encompass all [6205 km2 of] Palestinian territory that Israel occupied after the 4th of June 1967, including East Jerusalem. The parties may agree to minor and reciprocal modifications to the borders that are equal in size and objective value and that do not affect, among other things, territorial contiguity and water interests.
2.  Arguments

•  Definition of 1967 line: The 1967 line is defined as the 1949 Armistice Line along with all mutually agreed and legal changes to the Armistice Agreement made by June 4th 1967.
•  Security of a boundary: Only boundaries that the people perceive as legitimate and fair are secure. Therefore, for the boundary to be secure, any deviation from the 1967 line will have to be based on objective criteria.
•  Full sovereignty is a prerequisite for any state to effectively control its territory and be accountable with regards to its duties towards other states.

1.  Counterarguments to Israeli Arguments

•  Palestinians should show flexibility on territorial issues: Palestinian acceptance to exercise their right to self-determination on 22% of Historic Palestine and to relinquish 78% of their homeland was a painful concession for the sake of peace and ending the conflict. It is unreasonable to ask them to compromise further.
•  Demographic arguments: The peace process is based on UNSCR 242 & 338 and the facts on the ground as they existed on the 4th of June 1967. If Israel wants to base the process on demographic arguments, then all of Historic Palestine will be open for discussion. UNGAR 181 provided that the Palestinian state should encompass at least 44% of Historic Palestine. 
•  No Man?s Land is not part of the West Bank: The No Man?s Land is part of the West Bank because it was occupied after the 4th of June 1967 (the Israeli army was not in possession of it prior to that date).
•  Israel has non-expansionist security interests in the airspace and some areas of the West Bank: There are many creative ways in which these interests could be addressed without transgressing upon Palestinian sovereignty.  

1.  
   Water
2.  Language
   1.  The conflict over shared water resources shall be resolved in accordance with the 1997 United Nations Convention on Navigational and Non-navigational Uses of International Watercourses. OR
   2.  The conflict over shared water resources shall be resolved in accordance with customary international law, especially the principle of equitable and reasonable utilization. OR
   3.  The conflict over shared water resources shall be resolved in accordance with international law.
3.  Arguments

•  International law ensures that both parties? rights are properly protected. This is the only true method of achieving water security for Israel.
•  Water is essential to create a viable Palestinian state if the two-state solution is to have any basis in reality. Israel knows this better than anyone.
•  Israel has already recognized that Palestinians have water rights in the [Declaration of Priniciples][Oslo II Agreement].

1.  Counterarguments to Israeli arguments

•  Israel has attempted to justify its conduct on a quasi-legal argument relying on a ?prior use? claim of the shared water sources which is incompatible with customary international law and state practice. Israel has arrived at its present levels of consumption largely by preventing the Palestinians from utilizing water to which they are entitled, and normally would have access. Even if Israel were a legitimate prior user, “existing use” is only one factor to be considered, but it is not controlling, and certainly other factors are more relevant, such as social and domestic needs.
•  The Palestinians WILL NOT be drawn into a further round of minimal concessions by Israel, of small additional shared water volumes or in particular the provision of water from desalination, the Israeli Trojan Horse.  
•  To implement an inevitable reallocation of shared water resources, the Palestinians have developed a mutually beneficial transitional scenario that avoids harm to Israel. In brief, the Palestinians will require a period of time to build the infrastructure needed to utilize the additional allocations (“the transitional period”). Therefore, “harm” to Israel is avoided during the transition period through the development of new water sources for Israel that offsets the reallocation to Palestinians. The Palestinians will support Israel in seeking international financing for its new water, but only after determining the reallocation of shared water resources.

1.  
   Security

I. Military Capacity:

“Palestine will be an independent sovereign state with [limited] / [defensive] armament and a strong internal security force with ground, air and naval elements, [and will have credible defence guarantees from a third party]”

Alternative wording:

•  The terms “limited”, “defensive” (or inversely, “non-offensive”) are acceptable as long as it is clearly stated that Palestine will have a “strong” internal security force, or at least one “capable of meeting  all its security needs”
•  Specification of components of the force (ground, air, naval) may be omitted as long as no restriction is stated.  
•  The reference to guarantees may be omitted if it is dealt with in language on third party role.
•  The term “demilitarized state” is not acceptable.

Comment on “demilitarized state”:

This is likely to be the Israeli position. It is unacceptable because it would fundamentally undermine the sovereignty of Palestine. Furthermore, (a) demilitarization does not apply and has never been applied to whole states, only to specific or zones or territories; (b) a demilitarized state stricto sensu would not be able to exercise its basic sovereign functions ? the monopoly on the use of force to maintain public order and protect its borders.

Argument:

•  Focus should be on interests, in order to find a formula acceptable to both sides.
•  Obviously Israel does not expect Palestine to have no arms whatsoever ? therefore the term “demilitarized”, which is normally used to describe zones where no weapons may be located, is inappropriate.
•  “A state with limited arms” allows for detailed negotiations in the treaty on the type and degree of limitation that suits the interests of both sides.

II. Alliances and security cooperation:

“Neither Palestine nor Israel will enter into military alliances [against one another] / [with a party hostile to the other], or allow their territory to be used for military operations against each other.”

“Palestine and Israel will establish security cooperation arrangements, in which international forces will play a central role.  In addition, the two states will strive to establish a regional security regime.”

Comment on alliances and neutrality:

The essential element of the text is that neither party will enter into an alliance or “close security relationship [of a military character]” with a party/ies hostile to the other. This does not mean that Palestine should commit to “neutrality”.

Argument:

•  There is no need to require any form of “neutrality” from Palestine in the agreement.
•  Rather, as Palestine is expected to participate in regional security arrangements which would include Israel, it is inappropriate to apply “permanent neutrality” to it.

III. Residual Israeli presence / control:

Comment:

It is Palestinian interest that no Israeli presence or control remains on its territory by agreement. Therefore we should not  raise any issues relating to this matter nor should we propose any draft language.

Israel has demanded the following in the past:

•  Early warning stations
•  Military Presence and right to deploy in emergencies in the Jordan Valley
•  Control over airspace
•  Control over electromagnetic sphere

Argument:

•  Process ? we are now discussing core principles. Technical arrangements for limited presence for temporary period may be worked out in the treaty.
•  Substance ? Re EWS and Jordan Valley presence: there is no military rationale for such presence, given technology and the nature of any potential threat from the east.
•  Re airspace: There is no need for military use by Israel of Palestinian airspace, whether from training or conducting operations. Any Israeli demands in this respect should be discussed in the framework of bilateral and regional security cooperation.
•  Re civil aviation: We agree to work together in the framework of the Chicago Convention and the ICAO to come up with workable air traffic management and control arrangements that satisfy all our interests.
•  Re electromagnetic sphere: Any Israeli need of Palestinian EMS to undertake agreed Israeli security needs in the West Bank will be managed by the Palestinians. No Israeli sovereignty or control should be granted to Israel over the Palestinian EMS.  

1.  
   Refugees
2.  Language
   1.  The right of return and restitution shall serve as the framework for a resolution to the Palestinian refugee problem. Implementation of the rights will be subject to a negotiated agreement between the sides. OR
   2.  A just and agreed upon resolution to the Palestinian refugee problem based on UNGA Resolution 194. [Language of API] OR
   3.  A just settlement of the refugee problem [Language of 242]
3.  Arguments  

•  Our ideal language is that the right of return and restitution serve as the framework. A just solution in line with Resolution 194 is a compromise position.
•  “Just and agreed upon…”
•  This language is consistent with international legitimacy and our respective interests.
•  “Just” borrows from UNSC Res. 242 and is an implicit reference to international law.
•  “Agreed-upon” references an approach whereby implementation of the refugee rights will be subject to Israeli agreement.
•  “…based on UNGA Resolution 194”
•  See annex on talking points in favor of 194 as part of the terms of reference.

1.  Counterarguments to Israeli arguments

 “We don?t recognize UNGA Res. 194.”

•  Israel originally accepted Res. 194, including the principle of return, (even though it took exception to the timing of the implementation.)
•  Res. 194 is universally recognized as the appropriate basis for resolving the refugee problem.
•  It does not preclude reaching an agreement on implementation that accommodates your concerns.
•  Res. 194 has always been the basis of the Palestinian position on refugees. Any final agreement should

“We cannot accept a ?just? solution.”

•  The displacement of Palestinians in 1948 and the denial of their right of return is the core injustice of our conflict from the Palestinian perspective. We need to be able to signal to our people that we are representing their interests in achieving some kind of justice for them on this matter.
•  Again, such language is intended to mean that we look to international principles to guide our peacemaking efforts, but implementation will be subject to your agreement.