The new aims and proposals enunciated by Palestinian Authority Prime Minister Salaam Fayad regarding the establishment of a de facto Palestinian state within two years, with or without Israeli cooperation, would appear at first sight to be interesting. To a certain extent it could even be refreshing, offering a more pragmatic and viable forecast for the political and economic development of the Palestinians than any previous visions - which were based mostly on threats and unrealistic, belligerent rhetoric. However, the concept of a one-sided establishment of a de facto state outside the agreed-upon process would appear to ignore a central component of the framework in which Fayad himself is permitted to function, and from which he derives his own authority. THE 1995 Israeli-Palestinian Interim Agreement on the West Bank and the Gaza Strip, with all its faults and difficulties, nevertheless still remains the valid source of authority for the Palestinian administration in the territories, as well as for the entire functioning of Palestinian governance. This agreement sets out and enables the establishment and functioning of the Palestinian Council (which serves as the parliament of the Palestinian Authority), details the mode of election of its members and appointment of its ministers, and defines its jurisdiction, its legislative and other powers, structure and prerogatives. Similarly, the entire structure of the PA police force, the PA judiciary and other "state" institutions, as well as their security and economic relationship with Israel, are all part and parcel of this Interim Agreement, intended to serve as the ongoing basis and source of authority pending the completion of a permanent-status agreement, which would clearly replace the "interim" agreement. But one of the most important and intriguing, though lesser known provisions of the Interim Agreement lies - probably deliberately - hidden deep in the seventh subparagraph of the Final Clauses (Article XXXI). According to this provision, "Neither side shall initiate or take any step that will change the status of the West Bank and the Gaza Strip pending the outcome of the permanent-status negotiations." Clearly this vital provision places a reciprocal and parallel obligation on each of the parties - the PLO and Israel - not to unilaterally alter the status of the territories until such change is mutually agreed upon. The intention of the parties during the negotiations was clear - the Palestinian side will not declare a unilateral state, and the Israelis will not declare annexation. IT WOULD be interesting to inquire whether the advisers of Prime Minister Fayad brought this very basic provision to his attention prior to the publication of his plan. Similarly, one might wonder whether, in opening up this provision - if indeed that is his intention - he is not undermining the very delicate but vital structure that serves as the basis and foundation for the existence of the PA, and in fact, in so doing, freeing Israel from its side of the reciprocal obligation, with all that that might portend. Establishing a de-facto state would potentially have grave implications in many directions. Would it be considered a viable international entity? How would it undertake international obligations? How would it be seen by those states that are signatory to the Interim Agreement as witnesses, including the US, the Russian Federation, Egypt, the EU and Norway? In actual fact, Prime Minister Fayad's aim to build state institutions and apparatus has never been a subject for negotiation with Israel, and there is nothing to prevent him from proceeding with this important task. It is even set out as a requirement and expectation of the Palestinians in the Road Map. Similarly the call by Fayad "to involve all sectors and segments of society in the national drive to develop and advance our institutions" is a very welcome development that has also never been subject to the need for Israeli approval. So why is there a need to present it as if it is done deliberately behind Israel's back? Fayad's plan, if it is to be taken seriously by all involved, could and should be structured to function within the existing and agreed-upon framework of the Israeli-Palestinian relationship, rather than to attempt to undermine that framework and thereby open up a Pandora's box. It could serve as a refreshing opportunity and reason for Israeli and Palestinian teams to return to the negotiating table and work out a pragmatic way of moving forward toward the permanent-status agreement. The writer is a former legal adviser to the Foreign Ministry and former ambassador to Canada. He has participated in the negotiation and drafting of the Interim Agreement between Israel and the PLO.