Israeli demands for troops in Gaza blocking truce deal, sources say

DOHA/BEIRUT, Aug 22 (Reuters) - Disagreements over Israel's future military presence in Gaza and over Palestinian prisoner releases are obstructing a ceasefire and hostage deal, according to ten sources familiar with the round of U.S.-mediated talks that concluded last week.

The sources, who include two Hamas officials and three Western diplomats, told Reuters the disagreements stemmed from demands Israel has introduced since Hamas accepted a version of a ceasefire proposal unveiled by U.S. President Joe Biden in May.

All the sources said Hamas was especially concerned about the latest demand to keep troops deployed along the Netzarim Corridor, an east-west strip Israel cleared during the current war that prevents Palestinians' free movement between north and south Gaza, as well as in a narrow border strip between Gaza and Egypt known as the Philadelphi Corridor.

The sources asked not to be named to speak freely about sensitive matters.

Israel's current grip on the Philadelphi Corridor gives it control of Gaza's frontier with Egypt, the enclave's only crossing that does not border Israel.

Hamas sees Israel as having changed its conditions and parameters "last-minute," and worries any concessions it makes would be met by more demands, one of the sources, who is close to the talks, told Reuters.

The media office for the Palestinian militant group did not respond to requests for comment for this story. Israeli Prime Minister Netanyahu's office did not respond to questions about the talks.

In a press statement on Sunday, Hamas said the proposal arising from last week's talks was too close to Netanyahu's recent positions setting new conditions. It urged the mediators to stick to the implementation of a July version of the framework agreement, rather than starting new negotiations.

In a statement prior to the talks last week, Netanyahu's office denied making new demands, saying its position built on the previous proposal.

In the statement, the office said Israel's May proposal stated that only unarmed civilians would be allowed to return to the northern part of Gaza, crossing the Netzarim Corridor.

The office said Israel's new proposal, first presented at a meeting of mediators in Rome on July 27, was that an agreed-upon mechanism should be established to assure this, implying but not specifically mentioning an Israeli military presence at Netzarim to prevent the movement of Hamas fighters.

According to a second source close to the talks, Israel proposed that an agreement for the return of non-combatants to the north half of Gaza would be agreed upon "at a later date".

That was seen by some of the mediators and Hamas as Israel backtracking on a previous commitment to withdraw from the Netzarim corridor and allow free movement inside Gaza, the source said.

U.S. Secretary of State Antony Blinken concluded a whirlwind trip to the region on Tuesday, seeking a breakthrough. After meeting Netanyahu, Blinken said Israel had accepted a new U.S. proposal aimed at narrowing differences between Israel and Hamas' latest positions. He urged Hamas to do the same.

"Once that happens we also have to complete the detailed implementation agreements that go along with putting the ceasefire into effect," he said at a news conference on Tuesday.

The sides have not released what Blinken called a bridging proposal, and Reuters has not seen a copy.

One Western diplomat, describing Israel's latest demands in the U.S.-led talks, said it appeared the United States had accepted changes proposed by Netanyahu, including on a continued Israeli military deployment in the two corridors.

One U.S. official disputed that suggestion, saying the negotiations on the "implementation" would aim to hash out disagreements over the Philadelphi and Netzarim corridors, the number of Palestinian prisoners and who to release among other topics.

Blinken also pushed back on any suggestion of Israeli troops occupying Gaza on a long term basis, saying at the press conference that the schedule and location of Israeli military withdrawals were very clear in the agreement.

The next round of talks is expected in Cairo in the coming days, based around the U.S. bridging proposal.

The lead U.S. negotiator, CIA director Bill Burns, his Israeli counterpart, Mossad chief David Barnea, Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani and Egypt's lead negotiator are expected to attend, the source close to the talks said. Qatar's Sheikh Mohammed is expected to visit Tehran before heading to Cairo, the source said. An Iranian source said Sheikh Mohammed was due to visit on Monday.

Iran's foreign ministry did not respond to questions. The CIA declined to comment in line with its policy of not disclosing Burns' travel.

Two of the Hamas officials said the U.S. proposal contained some of the Israeli changes they reject, including allowing "Israel's continued military presence" along the crossings and releasing some Palestinian prisoners into exile, rather than to Gaza or the West Bank, in any swap for hostages.

However, a senior U.S. administration official said there was nothing in the bridging proposal that changed previously agreed commitments on the Netzarim Corridor. The official said any temporary arrangements on the Philadelphi Corridor must be consistent with Israel’s May 27 text and the outline put forth by Biden, as endorsed by the U.N. Security Council.

The proposal includes "massive and immediate benefits" for the people of Gaza and incorporates a number of Hamas' earlier demands, the official said.

Two of the sources, security officials in Egypt, said Israel and Hamas appeared willing to resolve differences in all areas other than that of the Israeli withdrawal.

Israel's war objectives include "securing the southern border," Netanyahu's office said in a statement on Thursday, referring to the Philadelphi Corridor.

In response to Reuters questions on differences over the latest ceasefire proposal, Egypt's state information service pointed to recent official statements emphasising a continuing push to reach a deal at talks in Cairo and Doha.

Qatar's international media office did not comment, but pointed to a statement issued late Tuesday after the Qatari prime minister spoke to Blinken, which urged efforts to secure a ceasefire in Gaza. In response to questions from Reuters the U.S. State Department referred to Blinken's public statements.

Control over the Philadelphi Corridor frontier area between Gaza and Egypt, along with the Rafah border crossing, is particularly sensitive for Cairo.

Egypt is prepared to take more security measures in the Philadelphi corridor but rejects the presence of Israeli troops there, the Egyptian security sources said.

Israel seized control of the strategic corridor in May, saying it was used by Hamas to smuggle weapons and banned material into its tunnels to Gaza.

The Israeli advance resulted in the closure of the Rafah crossing, sharply reducing the amount of humanitarian aid entering Gaza, halting most medical evacuations, and potentially depriving Egypt of its role brokering access at the only border crossing into Gaza that had not been directly controlled by Israel.

Egypt says that tunnels used for smuggling into Gaza have been closed or destroyed, that a Palestinian presence at Rafah should be restored, and that the Philadelphi corridor buffer zone is guaranteed by the 1979 Egypt-Israel peace treaty.

An Israeli troop presence along the corridors, the Hamas sources said, would amount to a continued Israeli occupation that would stop the free movement of civilians.

The two Hamas officials told Reuters the U.S. bridging plan "does not include a permanent ceasefire".

In the May proposal, Biden said a temporary ceasefire would become a permanent cessation of hostilities, "as long as Hamas lives up to its commitments."

The Hamas officials said Israel had also imposed a veto on the release of around 100 Palestinian prisoners whose names Hamas proposed, some elderly and with more than 20 years remaining on their sentences.

The issue of Palestinian prisoners to be released as part of a swap deal for hostages Hamas has held in Gaza since Oct. 7 had previously been seen as less difficult.

A main sticking point at present is an Israeli position that many of the prisoners it releases should be immediately deported and go into exile outside Israel, the West Bank or Gaza, the Western diplomat and the two Hamas officials said.

"In light of this, Hamas refused to accept the American-Israeli paper," one of the officials said.

A three-phase framework for a ceasefire deal has been on the table since late December, but the multiple disputes between Israel and Hamas over key details have made an agreement impossible.

The United States, along with mediators Qatar and Egypt, is trying to keep negotiations alive to end Israel's 10-month-campaign in Gaza and return remaining hostages seized by Hamas and its allies on Oct. 7.

The war began on Oct. 7 when Hamas gunmen stormed into Israeli communities and military bases, killing around 1,200 people and abducting about 250 hostages, according to Israeli tallies. More than 40,000 people have since been killed in Gaza, according to Palestinian health authorities.