The agreement beginning to take shape on the settlement construction freeze is based on an "unspoken understanding" that security authorities will not sign new building permits, but the government will not issue a formal resolution extending the freeze. Furthermore, a review found that the building moratorium is due to expire on September 30, not September 26, as previously thought.

A source close to Palestinian Authority President Mahmoud Abbas told Haaretz on Tuesday that from the PA's perspective, what mattered was not Israel's declarations but the moratorium's implementation on the ground.

The same source told Haaretz that the PA intends to make clear in the direct negotiations with Israel that it will not agree to complete demilitarization of the territories, as this was a condition no sovereign state could accept. However, the Palestinians would agree to have international forces positioned in the West Bank and Gaza Strip, with a wider mandate than that of the UNIFIL peacekeeping force in South Lebanon.

Meanwhile, a report released on Tuesday by the International Crisis Group on "The Palestinian Security Reform in the West Bank" said a collapse of negotiations and the hope for an agreement will make it very difficult for the Palestinian security forces to continue their work. The group noted that Israeli security officials have recently praised the Palestinian security forces' activities, especially in curbing anti-Israeli activities and clamping down on Hamas. Israel Defense Forces Chief of Staff Gabi Ashkenazi is quoted by the group as saying, "The more the Palestinian security forces do, the less we have to do."

The report notes the Palestinian Authority closed down some 200 Hamas-affiliated institutions and fired thousands of teachers and imams. However, the PA is waging its battle against Hamas-led opposition without judicial warrants and in blatant violation of the Palestinian constitution, the report said.

A Palestinian expert is quoted as saying that every raid and every fired Hamas man and every charity closed reduces the chances of internal Palestinian reconciliation. The report goes on to conclude that such developments weaken the PA's legitimacy as representative of the Palestinian people in negotiations with Israel.

ICG recommends that the PA improves its approach to human rights and releases prisoners held without proof of any crime. It warns that there should be no illusion that in the current set of circumstances, many if not most Palestinians would see any steps taken to bolster the Palestinian security forces as aimed at entrenching, rather than ending the occupation. The report is based on a wide selection of interviews with senior officials in the West Bank security organizations, senior Hamas functionaries and Israeli security officials.