From the Zeituna Restaurant to the Basel Furniture store, business once thrived along the road that runs through this Palestinian village, conducted in a language no longer spoken here.

For years Hebrew was the lingua franca of Arabs and Jews on Route 505, an Israeli-built highway that rushed bargain hunters from the Jewish state to Arab-owned businesses in the West Bank and Palestinian laborers to jobs inside Israel. Now, the highway is a road to nowhere, the flaking Hebrew signs along its empty length symbols of Israel's abrupt economic break with the occupied Palestinian territories.

The highway has been blocked at the western edge of this village by the $2.5 billion barrier Israel is building to separate Jews from the Palestinians of the West Bank, splitting a largely shared economy whose shops, factory floors and restaurant terraces once provided a rare meeting place for two peoples. Now they are living increasingly estranged lives in the land they are unable to share.

"Just traveling this kilometer and a half would take you an hour on Saturdays," said Ibrahim Amer, 53, who sells plastic furniture from a row of mostly shuttered storefronts under a large Hebrew sign at the village's only intersection. "As you can see now, no one is coming."

Since the September 2000 start of the most recent Palestinian uprising, the Israeli government has imposed stiff restrictions on Palestinian trade, permission to work inside Israel and movement among West Bank towns and cities. More recently, it has severed the economic link between the West Bank and Gaza Strip, the main territorial elements of the unrealized Palestinian state.

In a process that has accelerated sharply since the January 2006 election victory by the radical Islamic movement Hamas, the isolated Palestinian economy has imploded while Israel's has thrived on increased trade with Europe and the United States. Industries in Israeli settlements have also benefited financially by employing low-wage Palestinian laborers barred from Israel.

The Israeli government says the steps it has taken help ensure Israel's security in the absence of a peace deal. But Palestinian officials argue that the impoverishing effects of the economic separation spawn unrest in the territories and increase the potential for attacks inside Israel.

Israel's economy is nearly 40 times larger than that of the territories, even though its population is less than twice the Palestinian one in the territories. The lopsided effects of Israel's economic withdrawal have left much of the territories economically lifeless.

"We knew them," said Ruven Hirak, 51, an Israeli economics professor at Bar-Ilan University, who lives in the wealthy Jewish settlement of Elqana along Route 505 just beyond the separation fence from the village of Mas-Ha.

Grocery shopping in Elqana's busy central mall one recent afternoon, Hirak said of his Palestinian neighbors, "I sat with them in restaurants, bought from them, and some of them worked here.

"Now," he said, "there is no relationship at all."

The Road From Mas-Ha

Among the first Palestinian stores that Israelis encountered along Route 505 was Hisham Amer's home-improvement shop, the name of the paint brand Tamour written in Hebrew above the entrance. In pressed cotton pants and a plaid shirt, Amer watched a Ramadan soap opera in his unlit shop one recent afternoon, unbothered by a single customer.

Most of his clients were Jewish residents of Israel.

"We called it the million-and-a-half-shekel market because that's what we made each weekend," said Amer, 38, referring to the Israeli currency the two economies share. "Now it's zero. Since the fence went up, no one comes here, not even Arabs."

According to the World Bank, the Palestinian gross domestic product per capita has shrunk 30 percent -- to $1,129 -- since the uprising began. Unemployment and poverty rates have spiked across the territories, especially during the 16-month international embargo that followed Hamas's election victory.

By contrast, the International Monetary Fund estimates that Israel's per-capita GDP is $31,767, nearly double what it was on the eve of the Palestinian uprising.

Amer's brother, a partner in the business, has moved to Jordan to work in their father's store there. His other partner also has departed, leaving Amer with a wall lined with Hebrew-labeled hardware products and no one to buy them.

"If I get the opportunity, I will leave too," he said.

In Bidya, east of Mas-Ha on Route 505, a sign in Arabic reading "Abu Sayed Furniture" has been pasted over one in Hebrew that advertised clothes.

"It was clear that the Israelis do not come anymore," said Sayed Marai, a taciturn father of five, who made the language change after moving from Mas-Ha a few years ago.

The chests, cribs and bed frames spilling out of his small space are featured items in a Palestinian bride's dowry. After the two-month wedding season, Marai said, "we can go days without making a single shekel."

"I have no alternative," he said. "There is no other work."

The more than 550 military checkpoints, roadblocks and other obstacles within the West Bank, along with restrictions presented by the 456-mile separation barrier, have made it impossible for many Palestinian merchants to attract customers outside their small local markets.

The commercial obstacles are even more severe in Gaza, which Israel recently declared a "hostile entity," citing the persistent Palestinian rocket attacks originating there.

Since Hamas seized control of Gaza in June, the movement has run a parallel administration in the strip. Palestinian Authority President Mahmoud Abbas, a Fatah leader pursuing peace talks with Israel, leads a U.S.-backed government in the West Bank.

Seeking to improve Abbas's tenuous political standing, the Israeli government is allowing more Palestinian trade and employment inside Israel and its settlements. But the restrictions are being eased only for the West Bank -- not for Gaza -- even though Israel once pledged to treat the regions as a "single territorial entity" pending the creation of a Palestinian state.

"The West Bank economy will go up, and Gaza will go the other way," said Lt. Col. Baruch Persky, who heads the economic branch of Israel's military administration in the territories. "But even the West Bank's relationship to the Israeli economy will depend entirely on the security and political situation."

Given their poor local market, Gaza manufacturers once exported 95 percent of the furniture, clothing and other goods they produced. Nearly all of it was bound for Israel and the West Bank.

Many had Israeli business partners. But Gaza has been effectively sealed since June to all but emergency aid. The United Nations estimates that 85 percent of the strip's manufacturing businesses, unable to import raw materials or export their products through the Israeli-controlled passages, have shut down.

"We actually have lots of material in storage but no one to buy our products," said Ibrahim Mushtaha, a partner for more than three decades in el-Arusa Ice Cream Co. in Gaza City.

No longer able to export his ice cream bars to the West Bank, Mushtaha has laid off all but a dozen of his 60 workers since June.

"We only produce a little now because there is so little money here," he said.

Settlement Industries

In recent years, Israel has turned away from the Palestinian territories as a source of cheap manual labor and as a market for its goods. The transition has been economically painless for Israel thanks to the forces of globalization.

Many immigrants from South and Southeast Asia, reliable and unthreatening in the eyes of Israeli employers, have taken the jobs of Palestinians now barred from Israel's construction sites, citrus fields and restaurant kitchens.

On the eve of the uprising, 136,000 Palestinians, or nearly a quarter of the labor force, worked inside Israel or in Israeli-owned enterprises in the territories. With a financial stake in Israel's security, said Persky, the Israeli army officer, only a "very few" were even tangentially involved in suicide attacks. Today, 47,400 Palestinians from the West Bank, or less than 9 percent of the workforce, have such permits.

The United States and Europe are increasingly the largest markets for Israel's more than $40 billion in annual exports -- including cut diamonds, high-tech hardware and software, arms and agricultural products. Less than 5 percent of Israel's exports are sold in the Palestinian territories. By contrast, roughly 90 percent of Palestinian exports are sold inside Israel.

"It has always been attractive for us to get cheaper products and labor, and the short distance between us made this possible," Persky said. "Both sides benefited, but their side the most."

On the ridgeline east of Bidya stretches the Barkan Industrial Park, a gated compound of 200 Israeli factories churning out products from pretzels to software for sale in Israel and beyond. Its businesses have come under pressure from political activists who oppose their presence in the occupied territories. The Barkan Winery, which sold much of its product abroad, moved out as a result.

But Ariyeh Kestenboim, a 26-year-old Orthodox Jew, moved his textile factory into the industrial park three years ago when he could no longer secure low-cost Palestinian labor for his plant in Petah Tiqwa, a suburb of Tel Aviv. Israel's frequent closure of the territories often left him with no workers.

Half of the Palestinians with Israeli work permits are employed by Israeli-owned enterprises in the occupied territories. Persky calls the arrangement, increasingly prevalent, "a win-win situation" for the Palestinian workers and settlement businesses.

Kestenboim, the third-generation of his family to run the business, employs 10 Palestinians at his hillside factory. He also pays half the municipal tax he did inside Israel, revenue that goes to the nearby settlements.

"If I hadn't moved here, I would have had to close," he said. "The problem now is China."

A group of Palestinians walked along the industrial park's streets, among them a 38-year-old with a three-day beard named Atta Kleb.

Kleb once commuted along Route 505 to a job in a supermarket warehouse in the Israeli city of Herzliyya. But Israel revoked his work permit when the uprising began, and he scraped by with day jobs on local construction sites until two months ago, when he showed up at the park's gate looking for work.

At the time, the Palestinian employees of the Beitily furniture company had walked off the job demanding a pay raise. When they were rehired a few weeks later, Kleb kept his fill-in job because he spoke Hebrew.

For his work on the factory floor, he receives $45 a day, although he said the hours can stretch well into the night without additional compensation. His pay is not as much as it was inside Israel, but it supports his wife and nine children. His brother, who once worked with him in Israel, is still unemployed.

"This is all we have," Kleb said.