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This paper focuses on the question of Palestinian refugees. Its central thesis is that the major constraints impinging on a resolution of the refugee issue are less legal and political, than economic and demographic. Specifically, the paper argues that the current economic and democraphic situation in the West Bank and Gaza (WB/G) will severely limit the number of refugees who can return to Palestine and thus the options available to the negotiating parties. Moreover, unless current economic and demographic trends change dramatically, any solution that the parties reach is likely to be temporary and to depend upon the actions of other countries. Finally, the paper argues that the most important long-term need is the establishment of a viable economy in the West Bank and Gaza and this need should take precedence over the desire to reach a final settlement on the refugee issue.

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