Palestinian children hold portraits of jailed relatives near coffins symbolizing prisoners who died in Israeli jails, during a protest in Gaza City. (Wissam Nassar, Maan Images)

Under a complex twin-pronged initiative from the U.S. and Egypt, Israel's hard-line government is moving towards backtracking on two major planks of its policy in the occupied territories - resisting demands for a blanket freeze on all settlement building in the West Bank, and acquiescing in the end of its tight siege of the Hamas-controlled Gaza Strip.

As a result, several pieces in an elaborate diplomatic puzzle that seeks to resolve both a long stand-off in Israeli-Palestinian relations and a three-year showdown in Palestinian-Palestinian relations since Hamas won the Palestinian elections, are beginning to fall into place.

Even a full-fledged truce between Israel and Hamas, something that has proven elusive since the end of the 22-day Gaza war last January, suddenly seems not beyond the realm of the possible.

It is the Administration of U.S. President Barack Obama that generated the initial momentum and continues to provide much of the impetus for what could be a dramatic shift in the constellation of forces in the Israeli- Palestinian equation. But it is Egypt which is proving to be the linchpin - especially in regard to fostering a dramatic change within Palestinian domestic politics that would allow Hamas and the Fatah-controlled Palestinian Authority to work towards ending their power struggle.

Another round of talks between Fatah and Hamas representatives was getting under way in Cairo on Sunday with Egyptian mediators trying to convince the two sides to accept a reconciliation agreement that could yield a new Palestinian governing authority in Gaza.

The Egyptians, under their national intelligence chief, General Omar Suleiman and his deputy, Muhammad Ibrahim, are turning up the heat. They have designated Jul. 7 as a deadline, warning that if Fatah (represented by former prime minister Ahmad Qureia) and Hamas (headed by politburo deputy chief, Mussa Abu Marzouk) continue to remain at loggerheads, Cairo would withdraw its mediation.

According to reliable Palestinian and Israeli sources, key elements in the Egyptian proposal include the following: Hamas would agree to relinquish some of its control over the Gaza Strip; that would pave the way towards a ceasefire agreement with Israel; then, the subsequent lifting of the siege of Gaza through the opening of the border crossings with both Israel and Egypt would allow the setting up of a committee under Palestinian Authority President Mahmoud Abbas charged with administering Gaza.

Collaterally, military and security experts from Egypt and other Arab countries would be stationed in Gaza to oversee the revamped joint Palestinian security forces made up jointly of Fatah and Hamas units which would, inter alia, be responsible for supervising the border crossings on the Palestinian side.

Finally, new Palestinian elections are mooted for January next year.

The end result, backed actively by the U.S. and the EU, is to see the start of a process that that will pave the way for renewed negotiations between the Palestinian Authority and Israel. Egypt, the U.S. and the EU all recognise that without an internal Palestinian deal, Palestinian-Israeli talks would be futile.

To read the full article please visit Inter Press Service.