Israel and Egypt have been advancing a deal to improve living conditions in the Gaza Strip without involvement by the Palestinian Authority, official sources in Ramallah say.

According to a senior Palestinian official, an Israeli official visited Qatar during the visit of Egypt's intelligence chief, General Abbas Kamel, to Washington, in an attempt to push the proposal forth.

The Palestinian official said that the proposal being promoted in Jerusalem and in Cairo makes the United Nations responsible for promoting the projects while the Egyptians would be involved in the evaluation and supervision over the projects. The funding, he said, would come mainly from the Gulf States, including Qatar, with additional funding from the European Union and the United States. A reported $650 million would be invested in projects, without direct involvement by Hamas or the PA.

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Hamas has not yet officially responded to the proposal, but senior figures in the organization are sending a positive message, noting that an improvement in the situation is expected, although there is fear that the proposal's collapse is still possible.

According to a Hamas official, the most likely option currently on the table does not include a Fatah-Hamas reconciliation. According to him, "Gaza is on the verge of total collapse, also because of the sanctions the PA has placed on the Strip, so Hamas wouldn't think twice before accepting a proposal that would ease the Gazan population's suffering and give true relief by lifting the siege, even if there was a political price to pay."

The official told Haaretz that there are three possible scenarios for Gaza: a full confrontation with Israel, a long-term cease-fire that would include reconciliation based on prisoner exchange and lifting of the blockade and the scenario currently on the table, which has cease-fire as a first stage with prisoner exchange as the next stage and significant easing of the siege and the final stage, leading to a long-term cease-fire, but not internal Palestinian reconciliation.

Members of the Hamas political bureau continued a series of meetings Sunday discussing the Egyptian-led efforts for a cease-fire with Israel. No final decision was reached.

Fatah and the Popular Front for the Liberation of Palestine criticized Hamas for working towards a cease-fire without national Palestinian agreement, thereby serving Israel and the United States' plan to sever the Gaza Strip from the West Bank.

In light of the criticism, Hamas initiated a meeting with representatives of the Palestinian factions in the Gaza Strip, including Fatah. Senior Hamas figure Husam Badran, who recently arrived from Qatar with the delegation of Hamas' international leadership, said that the meeting was intended to coordinate positions and to ensure broad national consensus for any proposal that would be presented.

An activist in one of the factions who participated in the meeting told Haaretz that Hamas representatives spoke in general terms without discussing details, which have yet to be agreed upon.

Fatah's criticism of Hamas indicates that there is no expectation that the Palestinian government will return to the Gaza Strip, at least in the first stage, and that the PA will likely be a remote partner, working primarily with the United Nations.

An Egyptian source told Haaretz that Cairo still prefers a plan in which the PA is directly involved. Therefore, it is possible that the publications in recent days regardinng a proposal bypassing the PA were intended to exert pressure on the parties to promote reconciliation.

PA President Mahmoud Abbas has presented 14 objections that could derail the whole process.

The London-based Al-Hayat newspaper reported on Tuesday that the Egyptians submitted a position paper following the PA's reservations to the proposal. The position paper suggested the Palestinian government ministers would return to the Gaza Strip and manage their offices fully. Within five weeks, according to the paper, internal security arrangement between the sides would be coordinated in Cairo. In order to implement the provisions of the Cairo reconciliation agreement, a joint Fatah-Hamas committee will be set up. The committee will oversee transferring the payment collection mechanism and the legal system to the PA in return for paying salaries to government bureaucrats in the Strip, including officers nominated by Hamas.

A delegation of Islamic Jihad senior officials is set to visit Moscow for meetings with senior Russian officials. In June, Moscow hosted a Hamas delegation.

Cairo rejects funding from Qatar because of the diplomatic conflict between the two countries.

Two main proposals are under discussion – one presented by Egypt and the other by United Nations special Mideast envoy Nickolay Mladenov. The Egyptian proposal gives high priority to internal Palestinian reconciliation between Hamas and Fatah; to exchanges of prisoners and of bodies of soldiers, with Israel; and to an agreement for a long-term cease-fire, to last from five to seven years, with the first step being a cease-fire within days of signing the accord.