A dramatic development in the peace process is expected in the coming weeks, Palestinian sources told Ynet Thursday.
Prime Minister Benjamin Netanyahu met Mubarak in Cairo earlier this week. According to the Prime Minister's Office, "The two leaders discussed ways to jumpstart the peace process with the Palestinians, as well as the efforts to release kidnapped soldier Gilad Shalit."
The Palestinian sources said senior Egyptian and American officials are scheduled to hold discussions over the course of the next two weeks in hopes that they will give US special Mideast envoy George Mitchell the opportunity to present an agreement on the resumption of peace talks as early as the second half of January.
The sources said the negotiations will be based on the "Clinton outline", according to which Arab neighborhoods in east Jerusalem will be under the sovereignty of the Palestinian Authority, while the Jewish quarters will remain under Israeli rule.
According to the sources, a team led by chief Palestinian negotiator Saeb Erekat had met with Israeli negotiators headed by Netanyahu advisor Attorney Yitzhak Molcho to determine the general guidelines for the peace talks.
One of these guidelines states that the process will result in the establishment of an independent Palestinian state and that all of the core issues, including Jerusalem and the status of the Palestinian refugees, would be put on the table.
The parties, said the sources, agreed that the 1967 borders would be the basis for any negotiation. The Palestinians said Israel refuses to put a time limit on the negotiations, which they said would be conducted during the temporary settlement construction freeze recently declared by Israel.
Earlier Thursday, Defense Minister Ehud Barak called on Abbas to "show responsibility to his people and return to negotiations in order to give a chance to sought-after peace."
Speaking at a pilots' course graduation ceremony in Hatzerim, Barak said that any possible way to advance regional peace, at the heart of which is peace with the Palestinians, must sought out.
During his talks with Mubarak, Netanyahu stated that Israel's conditions include Palestinian recognition of Israel's right to exist as a Jewish state and the demilitarization of a future Palestinian state.
The PM stressed that while he does not oppose discussions on the core issues, the refugee issue would not be resolved by Israel and Jerusalem's status as Israel's united capital was indisputable.
According to his past statements, Netanyahu would agree to the establishment of a Palestinian state within the 1967 borders without ceding territories that include large settlement blocs or settlements that are deemed vital to Israel's security.
Ilana Curiel and Roni Sofer contributed to the report