Israel does not make demands regarding final status issues such as borders before negotiations. Those are substantive issues and must be subject to negotiations, not part of a pre-conceived plan that is presented as a take it or leave it plan by the other side. Israel's demand that its sovereignty be recognized has to do with formal, procedural issues. No country can be expected to negotiate with an entity or group that does not even accept its sovereignty. That is like having a meeting with someone who will not shake hands with you and who will not address you by name.
Rocket alarm sirens sound in southern Israel (Haaretz)
from the article: What Olmert could say