As Jerusalem leaders watch developments in the Middle East and on Palestinian streets, one high ranking Israeli Knesset member has signaled to Egypt that Cairo leaders could renew their mediation efforts between Israel and Hamas. This comes as a surprise because Israeli Prime Minister Benjamin Netanyahu would rather downplay any contacts that Israel might have with Hamas.

During a briefing at the Jerusalem Center for Public Affairs, MK Ronni Bar-On, Chairman of the Israeli Foreign Affairs and Defense Committee and a member of the Kadima opposition party, spoke to journalists and diplomats. He reflected on Egypt's previous mediation role in freeing Israeli POW Gilad Shalit.  For five years, a Hamas-affiliated clan was holding Shalit in an unknown location in the Gaza Strip until he was freed on October 18, 2011, as part of a prisoner exchange.  Many in Israel were concerned that terrorists with blood on their hands, who were released from Israeli jails during the exchange, would eventually conduct suicide bombings against the Jewish State; but, to-date, that has not happened. 

What has happened is that terrorists operating from the Gaza Strip have continued to launch rocket attacks on Israeli southern communities.  Israel's defense forces (the IDF) have retaliated in order to maintain deterrence, claiming they will not tolerate such attacks.  They put the responsibility on the Hamas government regardless of which terrorist organizations are operating.  Yet, at the same time, some Israeli leaders are showing a renewed interest in Egypt becoming a future diplomatic moderator between Israel and Hamas.

Egypt's current President Mohammed Morsi has ties to the Moslem Brotherhood, and the Brotherhood is the mother organization of Hamas. Israel wants to preserve the peace treaty with Egypt, and hopes to maintain a quiet border with Egypt and Gaza.  The recent terror attacks emanating from the Sinai, conducted by Bedouin terrorists associated with Al-Qaeda and other unidentified radical groups, have disrupted the calm along Israel's border with Egypt. This has resulted in an IDF troop build-up in the south and the near completion of a fence along the Philadelphi Corridor.  For now, Morsi has shown his ability to crackdown on the Sinai terrorists, while keeping peace with Israel.

Bar-On sees the latest outbreak of Sinai violence as an attempt to escalate hostilities between Egypt and Israel. He believes Morsi should not only continue to exert authority over the Sinai Peninsula, but also return Egypt to its role as a leading political powerbroker in the Middle East.

"We have the precedent of the influence that Egypt had on the Hamas organization during the tenure of President Mubarak, even on the Gilad Shalit process exactly a year ago."

Bar-On explained that when that process was taking place, leading Hamas figures were operating out of Syria. They have now fled Syria's civil war and are strengthening their position in Egypt. 

"This may, by all means, influence the attitude of Hamas to the Israeli-Palestinian conflict."

Reflecting on the recent attacks on the U.S. embassies in Cairo and Benghazi, Bar-On was quick to tell his diplomatic colleagues at the Jerusalem briefing that Egypt is not an enemy of the U.S. or Israel. He admitted that it has been a cold peace between Israel and Egypt over the past 35 years, and the Egyptian elite are still not ready to recognize the good relations between both states. But, he acknowledged that Israel would like to continue observing a peaceful frontier with Egypt, indicating that Morsi could see the benefit of Israel being a friendly neighbor. 

"We hope the new leadership will realize the importance of a moderate Egypt in the region."

To clarify his position, Bar-On was quick to state the three pre-conditions set by the Quartet in order for Israel to accept any direct relationship with Hamas:

(1)  Recognizing the state of Israel; (2) renouncing all violence; (3) and, accepting all previous agreements signed by all parties involved in the Israeli-Palestinian conflict.

Bar-On also emphasized that Israel will strive to maintain the peace agreement with Egypt while making sure the Jewish State is ready for any negative developments.

"It is clear that Egypt must fight terror within its border. Mind you, this war on terror must not compromise the security of the people of Israel and therefore must be coordinated."

Bar-On was referring to reports that Egypt did not obtain permission from Israel, as required by the peace treaty, to recently move tanks and heavy equipment into the Sinai in order to conduct a military campaign against Islamic terrorists.  He also sees the Sinai problem as far from being solved.  At the same time, Bar-On signaled to Egyptian diplomats that should Morsi's new regime continue to uphold the peace accord, it will open a window of opportunity.

"It could shift the way Hamas is used to negotiate. Such thoughts remain as hopes and not something we see when we look at the intelligence reports."

Critics of Morsi fear that he will use his power base to turn Egypt into a country that expresses Islamic fundamentalism through an emphasis on Sharia Law.  While Bar-On does not yet see signs of a pan-Islamic bond among countries in the region, Middle East analysts point to a new surge in Sunni power with the Moslem Brotherhood leading the way. 

Bar-On acknowledges that a vacuum in politics will always be filled. Since there is no democracy in the Middle East (except for Israel), extremists are taking advantage of instability in the region. Nationalistic and religious parties are reaping the fruits of the current revolutions.  The region could still collapse into anarchy, and Bar-On sees opportunities for Israeli-Palestinian peace fading away. During the briefing in Jerusalem, he called on Palestinian leaders to let go of all agendas and really try to make a difference.

"If negotiations do not get back on track we will be closing what could be possibly the last possibility for peace."

During the Israeli New Year, government leaders are in the process of making crucial decisions, looking to solve long-term threats, not only for the benefit of the Jewish State, but for the stability of the Middle East. Foreign Ministry diplomats along with Israeli politicians continue to remind the international community that Israel is their strong ally and the only government truly open to the Western world.  They want to make sure that the current Arab Spring does not turn in to a fundamentalist and jihadist winter threatening global peace.

Knowing that the current Hamas leadership will benefit from an upsurge in regional Islamic extremism, some of Israel's leaders seem to be banking on false hope that the Jewish State could do future business with Hamas. The thought that Hamas could be reigned-in by Egypt is a far cry from current realities. Furthermore, the deadlocked peace process with the Palestinians, and continued violence on the streets, is not exactly a hopeful path towards a sweet and happy New Year; but, some Israelis remain eternal optimists.

C. Hart is a news analyst reporting on political, diplomatic, and military issues as they relate to Israel, the Middle East, and the international community.