ISRAEL, Jordan, and the Palestinians, tossing aside Arab skepticism and Islamic resistance, are laying the groundwork for an economic alliance. The initiative builds on the peace pacts Israel signed separately with Palestinian leaders and Jordan since 1993, ending decades of sometimes-violent animosity. Representatives of the three met at a conference in Amman, Jordan, last weekend to seek ways to bolster their accords. They agreed to promote a plan that calls for an economic confederation that could develop into a political alliance. ''I think the best solution would be an economic confederation between Jordan, Israel, and the Palestinians, and a bilateral political federation between Jordan and the Palestinians,'' Israeli Economy and Planning Minister Yossi Beilin told the Monitor in a recent interview. Jordanian officials, while supporting the initiative, say that Israeli recognition of an economic entity between the three parties is not a substitute for tackling the difficult political issues. They insist that there will not be a durable peace in the Middle East until issues like the status of Jerusalem, the position of several million Palestinian refugees, and the future of Israeli settlers on the West Bank are resolved. But the proposed economic ties would provide coordinated planning in energy and water supplies, jointly managed transportation routes, coordinated trade, and shared ports and airports. It could mean that a Palestinian entity may never function as a fully autonomous state, because it would be operating jointly with the other two states. ''The Palestinian entity is a temporary measure to get away from the frictions in our relationship [with Palestinians],'' Abdul Hadi al-Majali, a member of Jordan's parliament told the conference. ''Then we can get down and discuss the options of confederation, federal unity, or an independent nation for the Palestinians.'' Next week, senior officials of the three planning departments will meet in Jerusalem to hammer out a joint strategy. This will be followed by a ministerial meeting in Bonn in October. ''Our first priority is to coordinate long-term planning to ensure that the three economies do not compete with each other and that we connect the infrastructures and maximize resources,'' Israeli Economy and Planning director Alon Liel told the Monitor in a recent interview. The close links between Jordan's 4 million population - more than half of whom are Palestinians - and about 2.5 million Palestinians in the autonomous Gaza Strip and the still Israeli-occupied West Bank dictate close cooperation among the three parties. Israel stands to benefit from the three-way partnership by reducing its own infrastructural costs and meeting the requirements for qualifying for substantial aid from the European Union for joint projects with its neighbors Jordanians and Palestinians would benefit from more open and efficient trade and transport and shared infra-structure. Israel's economy overshadows Jordan's and the emerging Palestinian state's. Israel's per-capita gross domestic product is $15,000 compared with $1,200 for Jordan and $800 for the Palestinians in the self-rule areas. Agreements between Jordan and Israel have already been signed in the fields of energy, environment, health, and tourism. Crucial accords on trade and transport are imminent. But free trade and transport routes are being thwarted by the cumbersome bottlenecks at the borders between Jordan and Israel, which are maintained to satisfy Israeli security priorities. Many of the joint projects are contained in last year's historic Israel-Jordan peace accord. But implementation is being hampered by a public backlash in Jordan against the peace with Israel. ''For the average Jordanian, the peace treaty with Israel presented hope of a better future and a better life, but that hope has been only partially realized,'' said Marwan Muasher, Jordan's ambassador to Israel. But the far-reaching plans could bolster the laboring Middle East peace initiative by consolidating political gains with economic development. The plans could also defuse the long-standing rivalry between Jordan's King Hussein and Palestinian leader Yasser Arafat given their overlapping roles as advocates of the Palestinian question of self-determination. These divisions, like the conflict over Jordan's claim of custodianship over Muslim holy sites in Jerusalem, has enabled Israel to play the two leaders against each other, usually at Mr. Arafat's expense. There is also a growing feeling in the Arab world that the time has come for the Palestinians to stand on their own. ''The Palestinians have for too long insisted that Arab diplomacy should be hostage to their cause,'' said Abbas Kelidar, political adviser to Jordanian Crown Prince Hassan, heir to Jordan's throne. THE plan is strongly opposed by militant Islamic movements that seek to establish an Islamic state in the Palestinian territories and Israel. Egypt, seeing itself being marginalized by the initiative, also rejects it. ''What about the other 95 million people in the region?'' asked Maj. Gen. Ahmed Ismail Fakhr of the Cairo-based National Center for Middle Eastern Studies. The triangular arrangement is also opposed by the right-wing Likud opposition in Israel, which favors partitioning the West Bank into sovereign Israeli cantons and Palestinian cantons that would fall under the political leadership of Jordan. But advocates of the new three-way partnership argue that it will soon build a momentum that will supercede the political obstacles. ''Not all the 12 million people share this vision at present, but the linkage between the three parties is inevitable,'' Israeli Health Minister Ephraim Sneh told the conference of Israeli, Jordanian, and American scholars and businessmen in Amman last weekend.