Israeli statesmen responded favorably to reports of an Egyptian-led proposal aimed at establishing a Palestinian state in the Sinai Peninsula in order to resolve the issue of refugees.
Earlier in the day, Egypt's Foreign Ministry denied reports of the initiative, which claimed President Abdel Fattah el-Sisi presented Palestinian President Mahmoud Abbas with the proposal. The ministry added that the proposal was actually made in the past by ousted President Mohammed Morsi.
The Palestinians were quick to deny the report as well, telling Ma'an news agency that it was fabricated and that Abbas would never agree to a proposal that did not include Israel's withdrawal to pre-1967 lines and East Jerusalem as the capital of the new Palestinian state.
Despite the conflicting reports, members of Israeli Prime Minister Benjamin Netanyahu's coalition hailed the plan, with Transportation Minister Yisrael Katz writing on Facebook that the idea was "wonderful" and a "vision of the end of days."
"Now all that remains is to convince [Abbas], seeker of the right of return [for Palestinian refugees], and the Israeli left, which is hell-bent on relinquishing land, to support the plan," Katz was quoted as saying by the Times of Israel.
Jewish Home Party MK Ayelet Shaked also came out in support of Sisi's alleged plan, calling it "reasonable and feasible."
Science and Technology Minister Yaakov Peri meanwhile told Israeli Army Radio that the report was "surprising" and needed to be looked at in greater depth.
"It's quite worthwhile for us to look at the proposal in detail despite Abbas's rejection," Peri said.
Israeli Army Radio reported earlier on Monday that Sisi presented the initiative to Abbas during their meeting earlier this week in Cairo.
In his alleged proposal Sisi suggested adding 1,600 square kilometers from Sinai's territory to Gaza (five times the area of the Strip) and establishing a demilitarized Palestinian state under the full control of the Palestinian Authority.
Abbas was asked in exchange to relinquish his demand that Israel retreat back to pre-1967 borders, one of the main bones of contention between the Palestinians and Israel during peace talks.
According to the report, Sisi told Abbas: "You are now 80-years-old, if you don't accept this proposal, your successor will." However, sources said Abbas turned down the offer.
The report added that the Egyptian initiative received the US's go-ahead and Netanyahu was also informed.
Palestinian unity government in danger
Meanwhile, tensions are running high between Hamas and Fatah, and the future of the Palestinian unity government is as uncertain as it ever been.
Responding to Abbas' fierce attack of Hamas and its conduct during the recent conflict with Israel, Hamas's exiled leader Khaled Mashal tried to appease Abbas, saying Sunday the two factions must resolve their differences.
On Saturday, Abbas warned that the current partnership between the Islamist group and the Palestinian Authority would not last if the situation in Gaza does not improve and Hamas does not accept Ramallah's demands.
“We won’t accept the continuation of the situation with Hamas as it is now and in this shape,” he said. “There must be one authority and one regime." Abbas also accused Hamas of running its own “shadow government” in the Gaza Strip. “They have 27 directors-general of ministries and they are running the Gaza Strip,” he said. “The national consensus government can’t do anything on the ground.”
Hamas spokesman Sami Abu Zuhri condemned Abbas and the PA leadership for the remarks against the Gaza leadership, saying, "President Abbas’s remarks against Hamas and the resistance are unjustified and the sources of information and figures he relied on were incorrect and have nothing to do with the truth."
Abu Zuhri continued by attacking unity government Prime Minister Rami Hamdallah's refusal to visit Gaza as an act of appeasement due to allegations of threats made against him. Zuhri claimed this was a false pretense as Hamdallah also fills the position of Ministry of Interior and is responsible for the police providing security to himself.
In an exclusive interview with AFP on Sunday, Hamdallah said he had been warned he would face problems if he visited the Gaza Strip, saying the international community has threatened to boycott the Palestinian leadership if it pays the salaries of former Hamas employees in Gaza.
Hamdallah, who heads the Palestinian government of national consensus which took office on June 2, said the problem of the wages had turned into the main stumbling block to an intra-Palestinian reconciliation deal.
Since signing the agreement in April, Hamas has demanded the new government take responsibility for paying its 45,000 employees, some 27,000 of which are civil servants, he said. The rest are understood to be members of the Hamas police and security forces.
Before the Hamas government stepped down in June, it had been unable to pay their wages for months due to a biting economic crisis.
But Hamdallah said his government had been warned against channeling any money to anyone employed by Hamas, which is blacklisted by the US and Europe as a terror organisation.
"The government and the banks operating in the Palestinian territories were warned that if they make these payments to former Hamas government employees in Gaza then the government and the people will be boycotted," he said.
"If this happens, the Palestinian banking system will face a huge problem that will threaten the Palestinian situation in general," he told AFP.
The Palestinians are heavily dependent on international aid with a boycott likely to have a devastating financial impact on its financial viability.