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In light of the international opposition to further unilateral steps by Israel, the government has begun to draft an alternative plan that would essentially convert Prime Minister Ehud Olmert's unilateral convergence plan into a bilateral move carried out in conjunction with Palestinian Authority Chairman Mahmoud Abbas (Abu Mazen).

According to the plan now being drafted by the Prime Minister's Office and the Foreign Ministry, Israel would propose to Abbas that they reach an agreement to establish a Palestinian state with provisional borders in Gaza plus about 90 percent of the West Bank. The provisional border in the West Bank would match the route of the separation fence, with one exception: Israel would retain security control over the Jordan Valley.

In this way, Israel hopes to prevent the convergence plan as an implementation of Phase II of the road map peace plan, thereby acceding to the demands of the United States, Jordan, Egypt and others that Israel resume negotiations with the PA under the road map. Under this proposal, the parties would proceed to Phase II without waiting for the completion of Phase I, which calls for dismantling the terrorist infrastructure.

Foreign Minister Tzipi Livni confirmed to Haaretz that she told senior ministry officials last week that "currently, Abu Mazen is not a partner for a final-status agreement, but he could be a partner for other arrangements, on the basis of the road map's phased process." One participant in this meeting said that Livni spoke explicitly about an agreement to establish a Palestinian state with provisional borders. Phase II of the road map presents the "option" of an independent Palestinian state with provisional borders, "as a way station to a permanent status settlement."

Prior to Hamas's rise to power in the PA, Abbas rejected the idea of a state with provisional borders, demanding immediate talks on a final-status agreement instead. However, Washington backed Israel's stance in favor of a provisional state, and Jerusalem expects that the U.S. will pressure Abbas to change his position.

Meanwhile, Defense Minister Amir Peretz has decided to reexamine the route of the fence, especially around Jerusalem, in order to reduce both damage to Palestinian property and the project's costs.

European Union envoy Mark Otte has also proposed evacuating isolated settlements in coordination with the PA, while giving the PA international guarantees that the border set by Israel will not be the final border. In an interview with Haaretz, he suggested putting the Jordan-West Bank border under European supervision, as was done with the Gaza-Egypt border, opening the Gaza port, and instituting a "safe passage" between Gaza and the West Bank. Otte said that Israel could bypass Hamas and implement this program in conjunction with Abbas, thereby bolstering his status.