US, Egypt, Jordan, Germany and Israel are working together on Gaza ceasefire package

DEBKAfile's Washington sources disclose that Washington, Cairo, Amman and Jerusalem are hammering out the lines of a ceasefire deal that will be contingent on the state of combat in the Gaza Strip. Jerusalem accepts the proposition that the ceasefire lines will follow the lines of combat reached in the Gaza Strip in the fighting between Israel and Hamas. Egyptian and Jordanian forces will then enter the Gaza Strip.

Prime minister Ehud Olmert told visiting European Union ministers Monday, Jan. 5, that diplomacy is in progress to find an "international blanket for damping down the blaze in Gaza." He did not elaborate, but, according to our sources in Washington, he was referring to Egypt as the prime mover in a ceasefire solution – not the US.

Alongside the overt diplomatic drive for a ceasefire, Washington is quietly moving ahead on a package in conjunction with Saudi Arabia, Jordan, Egypt – which is managing the Hamas track – and German chancellor Angela Merkel. Israel will hold the lines established on the day the ceasefire went into effect for a two-three month trial period. Egyptian and Jordanian units will remain in the enclave until a pre-set date. An international mechanism will prevent Hamas from rearming.

Egyptian intelligence minister Gen. Omar Suleiman outlined this deal for the Hamas delegation, headed by operations chief, Imad Al Alami, which arrived in Cairo Monday night, after finally agreeing to discuss a truce. It was clear to both sides that he was dictating honorable terms for a Hamas capitulation, as Israeli forces entered the third and most dangerous phase of their Gaza offensive, the entry into Gaza's densely built-up areas.

Tuesday saw heavy Israeli-Hamas street battles in Gaza City after a night of heavy Israeli aerial and naval bombardment. Israel forces engaged Hamas in Khan Younis in the south and hit the southern arms smuggling tunnels of the Philadelphi route and Rafah by air and land.

Hamas attacked the Israeli troops holding the Netzarim belt cutting Gaza City off from the south at Deir al Balakh.

This phase of Israel's Operation Cast Lead follows Phase 1, the heavy aerial bombardment of Hamas military and government infrastructure, and Phase 2, the ground, tank and artillery incursion on Jan. 1, which split the 360-sq km Gaza Strip into three segments.

The outcome of the toughest challenge of the ongoing Phase 3 for flushing out Hamas operatives mingling with urban populations and reducing their rocket-firing capabilities will determine the ceasefire lines for ending the conflict. Meanwhile Hamas was still able to keep up its constant rocket and missile fire by Tuesday afternoon, Jan. 6.

Our diplomatic sources report that the German chancellor's involvement in the US initiative has left French president Nicolas Sarkozy and his 48-hour humanitarian ceasefire proposal more or less standing. In any case, it was rejected by Israel except for his proposal to open a corridor for wounded Palestinians to leave the Gaza Strip for treatment.

The next UN Security Council meeting on the Gaza crisis is also likely to break up for a second time without accord on a ceasefire resolution.

Sarkozy continues his whirlwind Middle East tour in Damascus and Beirut Tuesday.