Israeli Prime Minister Ehud Olmert is expected to visit Egypt for talks with President Hosni Mubarak early next month, Egyptian sources say, in confirmation of an Israeli account. The visit, they added, should cover recent developments on the ground in the Gaza Strip, and Egypt's immediate and troubled backyard, including Egypt's efforts to strike a full truce between Israel and Hamas.

So far, the visit is not set to coincide with that of US President George W Bush to Sharm El-Sheikh this week, as Egypt had hoped. According to Egyptian officials, the possibility of finally arranging a three-way meeting of Bush, Olmert and Palestinian President Mahmoud Abbas is not 100 per cent eliminated but is not likely. As such, it would not offer an opportunity for what Egyptian officials qualify as a serious and committal face-to-face talks on the prospects of Palestinian- Israeli final status peace talks launched in November.

However, the same officials add that Olmert's visit in two to three weeks should provide an opportunity for Egypt to decide what really could be achieved on this front. "There is little hope that something serious would be produced out of the ongoing Palestinian-Israeli talks that were meant to open the door for a final status agreement," commented an Egyptian official who asked that his name be withheld. He added that as the hopes for an agreement, even a framework agreement, dwindle, Egypt is growing increasingly concerned about the impact of failure on the ground. The concern is that the frustration that would result from the expected political failure would lead to more confrontation on the ground. "And we know very well that when Gaza is put under pressure the spillover effect is immediately sensed in Cairo," the same official said. He added that this concern has become "an added reason" for ongoing Egyptian efforts to finalise a truce sooner rather than later.

The terms of the truce that Egypt has been trying to conclude for the past few months includes the full suspension of all Hamas resistance operations and all attacks by the Israeli occupation army on Gaza and Hamas activists. The deal also aims for Israel to take some measures to ease the stifling collective economic punishment imposed on the impoverished Strip. Eventually, this truce, as Egypt has hoped, should allow for the regulated re-operation of the Rafah crossing point, Gaza's only non-Israeli access to the outer world, and later to the implementation of a prisoner swap that would release the Israeli soldier Gilad Shalit, captured two years ago, in return for a few hundred Palestinians.

Last month, Egypt persuaded Hamas and other Palestinian factions to endorse a truce draft that does not immediately respond to their demand to include both Gaza, under the effective control of Hamas since June last year, along with the West Bank, the seat of the Palestinian Authority. The agreement the factions reluctantly accepted was formulated on the basis of "Gaza first" and "the West Bank within six months".

However, on Monday Israel expressed significant reluctance to pursue the Egyptian-drafted truce. During his extensive talks with top Israeli officials in Western Jerusalem this week, Chief General Intelligence Omar Suleiman was not accorded a clear nod of agreement. Informed sources hasten to add, however, that there was no clear rejection either. According to one official, Israel said "yes... but."

Egyptian sources say they were not expecting a full endorsement to be given to Suleiman during his talks in Israel. Suleiman, they add, travelled there knowing that the negotiation phase of the truce was not over.

Sources suggest that the main issues at stake include Israel's reluctance to include the West Bank in the agreement during or even after six months, and its rejection of Hamas's demand that the Rafah border be operated without direct or indirect Israeli supervision. Also at stake is an Israeli demand that Egypt provides firm guarantees regarding its monitoring of the borders with Gaza to fully prevent any illicit arms or cash smuggling through underground tunnels by Hamas sympathisers on the Egyptian side.

Moreover, Israel has repeatedly turned down the list of Palestinian prisoners that Hamas wants Tel Aviv to release in return for the freedom of Shalit. The Hamas leadership insists that some 350 of its activists imprisoned for life in Israeli jails should be released if Shalit was to return safely to Israel. Israel is also unwilling to cooperate on the simultaneous releases that Hamas demands.

While in Israel, Suleiman was told by Israeli officials that Israel wants the release of Shalit to be part of the initial deal rather than a follow-up step. In public press statements Mahmoud Al-Zahhar, a top Gaza-based Hamas leader, on Tuesday flatly turned down this demand. And hours later, a Hamas spokesman, Sami Abu Zohri, warned that if Israel was to turn down the Egyptian effort to conclude a truce, then Hamas will make its own decisions on how to deal with Israel in retaliation for the sanctions it is imposing on the Gaza population.

Egyptian officials say Cairo will not allow hopes for a truce to be dashed, especially in view of the deteriorating situation in Lebanon. "Our eastern neighbourhood is in very bad shape. We are trying to contain the situation as much as we can," commented an Egyptian diplomat.

A word of reassurance was delivered to Hamas in the wake of Suleiman's visit to Israel. "We told them that the process is still in progress and that we think some progress was made," suggested one source close to the Egyptian mediation. Further discussions with Hamas are expected in Egypt, either in Arish or Cairo, in the course of the next few days.

This week Egypt chose to operate the Rafah crossing point for a few days to "ease the pressure," one Egyptian official affirmed. Egypt had "alerted" Israel and the US that it will unilaterally operate the borders to "legitimately attend to humanitarian cases".

"We told everybody that it is beyond our ability to allow sick Palestinian citizens who need emergency operations to die in the strip. Exceptions are scrupulously made," the official said. "This said, he added, Egypt would not grant Hamas its wish of full re-operation of the crossing even if the conclusion of the truce is "delayed or confronted with difficulties." The Damascus-based Hamas leader Khaled Meshaal had publicly called on Cairo to unilaterally re-operate the crossing should Israel turn down the truce deal.

Meanwhile, Egypt is expecting a visit by Israeli Foreign Minister Tzipi Livni in Sharm El-Sheikh next week for meetings of the World Economic Forum focussing on the Middle East. Livni is not expected to miss the meeting despite a serious corruption charge levied against her political rival Olmert which might result in Livni sitting in for him as head of the Israeli cabinet. During her visit, brief as it may be, the top Israeli diplomat is likely to be warned by Egyptian officials over the consequences of Israel stalling on the truce. "A deterioration of the situation will be bad for everybody, Israel not excluded," argued an Egyptian diplomat.

Egyptian officials say the ultimate Israeli answer to their truce proposal is to be provided by Olmert to President Mubarak early next month. They add that they are not expecting 'no' for an answer.