Palestinian forces have been redeploying in Gaza
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There is again talk of a meeting between Israeli Prime Minister Ariel Sharon and the new Palestinian President Mahmoud Abbas.
Senior political and security officials began preparations for the summit after Mr Sharon lifted a freeze on contacts with the Palestinian Authority.
Since then the Israeli Prime Minister and his generals have expressed satisfaction with steps taken by Mr Abbas to stop Palestinian violence.
The Palestinian president has deployed
security forces in Gaza in coordination with the Israelis, and negotiated a period of calm with the armed factions.
The Israeli army responded with parallel steps, announcing on Friday that it would sharply reduce its military operations in the occupied territories.
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The PA is asking for thousands of prisoners to be released - Israel is talking about hundreds
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Security officials from both sides are now discussing a possible redeployment of Israeli troops in the West Bank, transferring control of some cities to the Palestinian police.
In a dramatic change of tone, Mr Sharon praised the PA's "positive approach" and spoke about the possibilities of "a historic breakthrough in relations between us".
However, he has made it clear that his standard for judging progress is the extent to which Mr Abbas not only keeps the militants quiet, but takes "comprehensive action to end terrorism, violence and incitement".
These issues would be the top priority for him in any summit.
Palestinian priorities
Mahmoud Abbas has other issues.
He says he needs to see Israeli action on many fronts if he is to consolidate Palestinian support for his leadership and policies.
Palestinian leaders argue that they have taken steps to meet a number of their obligations outlined in the peace plan known as the roadmap, including security reform and elections for a new leadership.
They want Israel to reciprocate.
Mr Abbas is hoping to win an Israeli ceasefire declaration to cement the de facto truce the armed Palestinian groups are observing.
So far Mr Sharon has said Israel will respond to quiet with quiet, but will not be bound by a formal agreement.
The Palestinian Authority also wants the release of prisoners.
It is asking for thousands, the Israelis are talking about hundreds.
Then there are crucial political issues.
Mr Abbas is expected to demand a freeze of Israeli construction in occupied Palestinian territory, including Jewish settlements and the West Bank separation barrier.
False dawn?
These are widely seen by Palestinians as the main threats to their hopes for a viable independent state.
They fear that Israel will continue with unilateral steps that change the character of the West Bank rather than enter serious negotiations about its future.
They were also alarmed by recent reports that Israel is preparing to revive an old law that could lead to the seizure of large tracts of Palestinian land in Arab East Jerusalem, which the Palestinians want for their future capital.
Palestinian negotiators say they want action on all of these things.
Mr Sharon is likely to countenance movement on only some of them.
Both leaders appear ready for a summit, but it remains to seen whether it will be a new start for the peace process or another false dawn.