JERICHO -- In the desert to the south, Israel and Jordan have signed a historic peace treaty and started planning for their shared prosperity. But in the West Bank, directly between them, commercial towns like Jericho are strangling.


Cordoned tightly between sealed-off markets in Jordan and Israel, this town under limited Palestinian self-rule is surrounded by lush groves of banana and citrus trees with no one to buy what they produce.


Each for its own reason, Israel and Jordan are squeezing the roughly 1 million West Bank Palestinians. Symbolized by the snubbing of Palestine Liberation Organization Chairman Yasser Arafat, whom Israeli Prime Minister Yitzhak Rabin publicly disinvited from Wednesday's signing ceremony, the exclusion of the Palestinians is deliberate and concrete.


If not for the politics of the thing, that would be strange. Jericho stands astride the most direct route between Jerusalem and Amman, and the family ties of West Bank Palestinians would seem to make them natural beneficiaries of open borders.


But the collapse of the Israeli-Jordanian war frontier does not look as though it will be moving soon to where Palestinians live and work. Most of the flow of people and goods across the border is planned for two new crossing points -- one in the far north, at the just-built Sheik Hussein Bridge east of Haifa, and one in the far south, at the border between Jordan's Aqaba and Israel's Eilat. Both are well away from the West Bank.


"The center of activity will be on these new passages, and we'll be kept in the middle without benefiting from the trade or the tourists," said Samir Abdallah, a director of the Palestinian Economic Council. "They will not need even a cup of water from us."


The Allenby Bridge, a few kilometers down the road from Jericho's central square, remains a hostile and forbidding passage. Only recently did Israel stop strip-searching every Palestinian who crossed, and it can still take a whole day or more in the sun to pass the gauntlet of inspectors, fee-collectors and license takers.


Still worse, there are fewer and fewer reasons to bother. For six months now, according to truckers and merchants here, Jordan has issued no import certificates for fruit and vegetables from the West Bank.


Here in Jericho, the impact is crushing. For lack of anything better to do, Ziad Darwish slept one afternoon this week on the hard stone floor of his empty tire repair shop. A skilled mechanic, he used to work on the Allenby Bridge reassembling cargo trucks that Israeli soldiers had ordered to be stripped to their frames in security checks.


But even that employment has disappeared. So few trucks now cross the bridge that few mechanics are needed there.


"We have nothing to do," said Darwish, 34. "From morning until now, just one customer came into my store. In the intifada days, we lived better than now."


Abdallah, the Palestinian economist, said Jordan's King Hussein began squeezing the West Bank to demonstrate his displeasure with Arafat, a longtime rival, who came to a modest share of power under self-rule in July. Israel, for its part, is openly favoring Jordan in an effort to increase its bargaining strength with Arafat and his Palestinian Authority.


"The fact that Israel has reached an agreement with Jordan will strengthen the Israeli position vis-?-vis the Palestinians by reducing the leverage the Palestinians used to have -- namely, the fact that progress with the Palestinians would help deliver other Arab states," said Ghassam Katib, a former member of the Palestinian negotiating team.


Hussein, in an interview published Tuesday in Israel's daily Yedioth Aharonoth, put the two governments' shared view as succinctly as this: "Arafat is our problem and yours."


Abdallah and other Palestinian leaders said Israel is playing "a dangerous game" by taking sides.