This article focuses on economic dimension of Israeli policy towards Palestinian territories occupied in 1967. The article argues that since 1967, both before and after Oslo process, Israeli policy was directed at preventing Two, i.e. division of land into two states and two economic (and political) sovereign entities, while also negating One, i.e. establishment of a single political and economic entity. Although Israeli policy repudiated both Two and One, it changed character and formulations from time to time. Thus, Israeli policies will be examined with all their twists, turns, and reversals, discussing their repercussions on Israel and especially on Palestinian economy. INTRODUCTION: THE DILEMMA OF THE OCCUPATION to me if I do, and woe to me if I don't. - Former Prime Minister Levi Eshkol, quoting Talmud to Israeli Defense Force generals in 1967 Many Israelis, including those who shaped country's policies after June 1967 War, did not realize that Israel would continue to rule West Bank of Jordan River for so many years. At first, declarations and private meetings indicated that it was probably temporary, partly since there were serious doubts about Israel's ability to hold and continue to rule newly occupied Territories.1 A clear message came from leading global powers against future annexation of Territories and there was also a major discrepancy between Israel's desire to expand its sovereign territory and international law. However, Israeli policy-makers, among them Prime Minister Levi Eshkol, had other doubts arising not from country's political ability to expand geographically, but from implications of such a decision. In a recent account of 1967, Tom Segev wrote: Once Eshkol shared his thoughts with IDF generals, there was no doubt as to what he wanted: A large country empty of Arabs. But not for first time he relayed feeling that Israel was a victim of various forces and historic processes beyond its control. Thus he used Talmudic expression: Woe to me if I do, woe to me if I don't ... The effect of continuing conquest on Israel as a democratic, Jewish state disturbed Eshkol more than it did Moshe Dayan; this was only real difference between them. All rest were ego and politics.2 The far-reaching consequences of integrating Territories into Israel were well-understood by some leaders. Annexing Territories and erasing pre-war economic and political borders - the Green - meant forming one geo-political unit. Forming one unit could bring about integration of Palestinians into Israeli polity and generate a new political reality. Conversely, preserving border and not annexing Territories could lead to establishment of two political and economic units between Mediterranean Sea and Jordan River. The controversy between integration and separation, between erasing Green Line and preserving it, between One and Two, has haunted discussions from very beginning.3 Understanding continued tension between integration and separation is an integral part of any analysis of years since 1967. In this article I will focus on economic dimensions of Israeli policy which refrained from deciding one way or other, avoiding a decision on Two entities or One. I will argue that since 1967 Israeli policy has been directed at preventing Two, i.e. division of land into two states and two economic (and political) sovereign entities while also negating One, i.e. establishment of a single political and economic entity. Although since 1967 Israeli policy has repudiated both Two and One, it changed character and formulations from time to time. Thus, I will examine Israeli policies in depth, with all their twists, turns, and reversals, discussing their repercussions on Israel and especially on Palestinian economy. …