Hundreds of thousands of Palestinian Arabs have fled to neighboring states, while Jewish immigrants to Israel have swelled the population to 5.5 million. To secure peace, Israel in 1982 ended its 15-year occupation of the Sinai Peninsula, returning it to Egypt. The intifada , a Palestinian rebellion that began in December 1987, took hundreds of lives before peace negotiations resulted in a 1993 accord granting Palestinian authority in the Gaza Strip and the West Bank city of Jericho. Israeli control of East Jerusalem, the Golan Heights, and the rest of the West Bank remain points of contention. Work permits are required for Palestinians from the occupied territories, and curfews are sometimes imposed to limit conflict between Israeli Jews and Palestinian Arabs.
Government spending accounts for two-thirds of economic activity.
Large-scale tree planting and irrigation projects have transformed parts of the Negev desert into sources of citrus and other export crops. Tourism is an important foreign currency earner.