In what could be the first agreement between Israel and Hamas since its takeover of the Gaza Strip last year, the two sides are believed to be on the verge of an informal pact to halt cross-border attacks and lift the economic siege on the 1.4 million Palestinians in the coastal enclave.
Egyptian mediators met with Hamas officials in Cairo Tuesday to get the Islamist militants' response to a proposal on a tahadiyeh, Arabic for relaxation, discussed with Israeli Defense Minister Ehud Barak earlier this week.
The talks have been accompanied by a chorus of warnings by Israeli officials that a broad military incursion is only a matter of time, reinforcing speculation in Gaza and in Israel that any agreement is doomed to be a temporary timeout from fighting.
"The clock is ticking and time is running out, because the current situation cannot continue," says Mark Regev, a spokesman for Prime Minister Ehud Olmert. "Either it will stop and a calm will be achieved through the Egyptian channel, or the government will instruct the military to bring about an end to these hostile attacks."
On Wednesday, fighting continued with Israeli forces killing three Palestinians in Gaza, including a 13-year-old boy and two militants. Two rockets, fired from Gaza, landed in the southern Israel town of Sderot.
Indeed, any agreement is expected to be extremely fragile.
In addition to a cessation of all rocket, mortar, and sniper attacks from Gaza, Israel is conditioning the calm on what would be an unprecedented halt to weapons smuggling and the movement of militants across Gaza's border into Egypt.
Israel says it is worried that the Islamic militants will use the lull as an opportunity to stockpile missiles and to sneak in field commanders trained outside of Gaza. It is unclear what new mechanisms might be put into place to halt smuggling.
Hamas will for the first time face confronting independent militias that could use Israeli offensives in the West Bank as a pretext to launching attacks from Gaza. Over the course of the cease-fire talks, Hamas dropped a demand that the relaxation in hostilities include the West Bank.
"Islamic Jihad is not convinced that they must observe a calm in Gaza if there is aggression in the West Bank," says Talal Okal, a Gaza-based columnist for the Al Ayyam daily newspaper. "Many other groups like the Al Aqsa [Martyrs] Brigade don't have an interest in a [period of] clam," he added, referring to the militia linked to the rival Fatah Party.
So why give tahadiyeh a chance?
In Israel, the attention of officials is focused elsewhere in the region. Hezbollah's recent show of force against militias allied to the Lebanese government has stoked concerns in Israel that its northern neighbor is being increasingly influenced by the Shiite group allied with Iran.
"The terrorism of Hamas in the Gaza Strip is the less troublesome threat," wrote Amos Harel, the military commentator for the daily Haaretz newspaper. "The recent developments in Beirut are keeping Israel's intelligence awake at night."
Haaretz reported that a Hamas-Israel cease-fire could be implemented by the end of the week. Though Israel isn't expected to formally announce any kind of truce (the prime minister's spokespeople don't even admit to having indirect talks with Hamas), Israel's military establishment will wait to make sure there's a full cessation before making good on its commitment.
Mr. Olmert, meanwhile, is grappling with a growing tide of reports about an investigation into whether he accepted money improperly from backers when he was a cabinet minister and the mayor of Jerusalem.
With the background noise of the recently revealed investigation, commentators are speculating that every one of Olmert's decisions are colored by his interest to deflect calls for his resignation over the scandal. And though many Israelis might support an invasion of Gaza, Olmert will almost certainly face cynics who accuse him of sacrificing soldiers for his political career.
Israel has appeared to give up on a demand that captured soldier Gilat Shalit be released as part of the cease-fire, despite calls from his parents that he be included. Instead, Israel is insisting on "movement" on a resolution to his case.
"The best thing for Olmert to do now, is to have some peace and quiet," says Yossi Alpher, the coeditor of the online Israeli-Palestinian dialogue website, Bitterlemons.org. "He's being investigated and from this standpoint this is the best move he can make."
Mr. Alpher says, however, that he believes an agreement is doomed to failure.
The same assessment prevails on the other side of the border, where Hamas is convinced that, sooner or later, Israel will order an invasion in Gaza.
And yet, Hamas is more worried that the daily cycle of attack and retaliation ultimately undermines their rule in the Gaza Strip, say observers.
A cessation of hostilities is expected to be accompanied by an Israeli commitment to reopen border crossings that are the coastal strip's economic lifeline. The siege is so severe that blackouts have become a part of daily life in Gaza and cooking gas is in constant shortage.
"They need a chance to deepen their rule," says Mr. Okal. "They want to change the situation in the Gaza Strip."