In recent weeks the Foreign Ministry, Military Intelligence, the Shin Bet security service and the Mossad have distributed a number of documents stating that a return to negotiations would tone down tensions and anger against Israel.

The documents, issued ahead of the expected UN vote on a Palestinian state, also state that while changes in the Arab world could be a threat to Israel, they also represent opportunities for Israel to improve its diplomatic standing.

"All the documents recommend progress vis-a-vis the Palestinians," a source close to Defense Minister Ehud Barak said.

In recent meetings of the eight senior cabinet ministers, Barak told Prime Minister Benjamin Netanyahu and the other ministers that the focus should be on Israel's interests and not on symbolic issues like national honor. If Israel does not try to seriously move the peace process ahead, it will be seen as obstructionist by its friends in the West, Barak told the ministers.

"By sharpening tensions with the Palestinians, we are inviting isolation on Israel," Barak also told the octet.

Barak believes the security cabinet should not to be dealing with tactical matters such as an apology to Turkey or evacuating the embassy in Cairo, but with strategic issues involving Israel's standing in the region. "The signs are there; afterward we'll have to ask ourselves what we could have done differently," Barak said in closed conversations.

Meanwhile, France and Spain, along with the European Union's high representative for foreign affairs and security policy, Catherine Ashton, are in advanced stages of negotiations with the Palestinian Authority over a "package deal" that will enable the 27 member states of the EU to vote at the United Nations General Assembly in favor of upgrading the PA to the status of a non-permanent member of the UN.

The Europeans are also trying to gain the United States' agreement to abstain from the vote and continue its financial aid to the Palestinians, in return for a promise by PA President Mahmoud Abbas not to take Israel to the International Criminal Court in The Hague.

Three senior European diplomats involved in the negotiations told Haaretz that the PA president had informed the EU of his decision not to turn to the UN Security Council on September 20 and request that Palestine be accepted as a full member of the organization.

Abbas, who realizes that the United States will exercise its veto power at the Security Council, has decided to turn to the UN General Assembly, whose resolutions are less binding, in order to seek the support of the European Union member states in the vote.

Abbas is expected to meet in Cairo today with Ashton, who is in charge of the EU's foreign policy, and with the foreign ministers of the Arab League Monitoring Committee. During both meetings the diplomatic deal being worked out will be discussed.

Among the elements included in the package being negotiated are the following:

a. The Palestinians will ask the UN General Assembly to upgrade their standing to something similar to that of the Vatican, which has permanent observer status at the international body. This will enable the Palestinians to be full members in a series of international organizations.

b. A large block of the 27 member states of the EU will vote in favor of the resolution, but the resolution will include a clause stating that the vote does not require that each state recognize the Palestinian state on a bilateral level. This is a critical condition for gaining the support of Germany and Italy to the vote. It is assumed that if this is accepted, at least 20 of the 27-member block will vote in favor of the resolution.

c. The Palestinians will commit to resuming negotiations with Israel immediately following the vote at the UN, without any preconditions.

d. The wording of the resolution the Palestinians will bring before the General Assembly will be balanced and will combine elements of the speeches of U.S. President Barack Obama of May 19, 2011, and the conclusion of the EU's Foreign Affairs Council of December 2009. In other words, the negotiations will be held on the basis of the 1967 borders with an exchange of territory and a statement according to which the EU will be ready to recognize the Palestinian state "at an appropriate time."

Meanwhile, France and Spain, along with the European Union’s high representative for foreign affairs and security policy, Catherine Ashton, are in advanced stages of negotiations with the Palestinian Authority over a “package deal” that will enable the 27 member states of the EU to vote at the United Nations General Assembly in favor of upgrading the PA to the status of a non-permanent member of the UN.

In parallel, the Palestinians are holding consultations with Germany, Britain and Italy on an agreed wording for the resolution, which would enable the three large EU member states to vote in favor. Spanish and French diplomats noted that they are very close to achieving an understanding with the Germans.

Ashton and the five large EU countries are keen to avoid an internal European division over the issue. "We will do everything possible not to isolate Germany," European diplomats said.

A senior German diplomat did not deny the developments and said that his country is interested in a "package deal" with the Palestinians on a balanced resolution.