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Some reservists called up earlier this month were sent home on furlough on Tuesday. This may be a hint that Israel is still delaying the third stage of its offensive in the Gaza Strip - a significant deepening of its ground operation.

Meanwhile, the diplomatic efforts to bring the fighting to an end are continuing, albeit slowly.

As expected by many analysts, Hamas offered a less than clear response to the Egyptian cease-fire initiative. The deputy head of the Hamas politburo, Musa Abu Marzouk, explained that some changes to the proposal are necessary.

"If the changes are accepted, the Egyptian proposal will become a framework for a solution," he said on Tuesday.

Hamas is mainly concerned about the lack of a timetable in the Egyptian proposal. Cairo is demanding the immediate cessation of hostilities, without offering a timetable for the withdrawal of the IDF forces from the Strip. Also, only at a later stage will it be decided when and how the crossings to the Gaza Strip will opened.

Hamas sees answers to these issues to be critical and would like clear commitments as part of a cease-fire.

Moreover, Hamas is also opposed to the third part of the Egyptian proposal which calls for the resumption of talks with Fatah in an effort to mend the internal rift in the Palestinian camp - and the return of Palestinian Authority officials to the Gaza Strip.

Talks between Hamas and Egypt will continue in the coming days and delegations will travel between Cairo, Gaza and Damascus.

The lack of developments in the Egypt-Hamas talks seems to have contributed to the further delay of the scheduled visit to Cairo of Amos Gilad, the head of the political-security bureau at the Defense Ministry.

In Jerusalem there is a growing concern that Hamas may be playing for time - six days prior to the swearing in of a new U.S. president, the group may prefer to wait for the Obama Administration in the hope that the environment may be more conducive to its aims. The rumors that Hamas is close to throwing in the towel, which began to circulate following the speech by Ismail Haniyeh Monday, proved to be premature.

In the field, Israel continues to apply military pressure - both in practice, by targetting Hamas and tightening the noose on Gaza City, but also by suggesting that the worst has yet to come.

The future of the Philadelphi route is the most crucial point in any arrangement for ending the fighting. Israel's concern that the smuggling of arms will continue along the route running parallel to Sinai centers on the possibility that in the future, missiles capable of striking Tel Aviv will be brought in by Hamas.

If the gap in southern Gaza is not blocked, Iran will be able to, indirectly, threaten central Israel in months, if not weeks.

Only at this stage is the sophistication and extent of the smuggling mechanism in place being understood in Israel, and the role played in that smuggling by officers in Iran's Revolutionary Guards. Since the success of the naval commandos in intercepting the Karin A, a ship carrying weapons to the Palestinians in January 2002, the Iranians have changed their methods. Instead of smuggling large quantities, the arms are brought in small amounts through an intricate network of mediators.

But these small shipments included Katyusha rockets, and there is a possibility that Fajr missiles will follow - reaching targets 70 kilometers from Gaza

Israel has noted that Security Council Resolution 1701 ending the Second Lebanon War has a major weakness: arms smuggling that allowed Hezbollah to rearm. In the case of the Gaza Strip, Israel is adamant that this matter needs to be dealt with thoroughly. Israel will not make do with the good will of engineering experts - some of them academics - that the Germans are proposing.

Until Tuesday night, Hamas has avoided extensive attacks on IDF forces and made do with pinpoint delay tactics. But the General Staff is cautious in promising that this is the way things will remain if the ground offensive moves further into the city centers.

Meanwhile, cutting the Strip in two is proving effective, at least in terms of disrupting Hamas resupplying the north. For example, there has been a substantial drop in the number of mortars being fired, probably because the ammunition is stuck somewhere in Rafah.