Egypt is exerting immense pressure on Hamas and Fatah to accept a plan that calls for holding presidential and parliamentary elections in the first half of 2010, representatives of the two parties said over the weekend.
Although Hamas and Fatah have accepted the plan in principle, each side has expressed reservations about some of its ideas.
The plan, which was recently presented to the two parties by the Egyptians, talks about holding elections under Arab and Western supervision.
Under the plan, political lists would account for 75% of candidates, while the remaining 25% would be allocated to district lists.
Hamas and Fatah have yet to agree on this specific proposal.
Abdullah Abdullah, a Fatah legislator in the West Bank, said that his faction favors proportional representation, whereas Hamas is demanding that at least half of the Palestinian Legislative Council be elected through district representation.
Fatah's main fear is that a large representation for political lists would enhance Hamas's chances of winning, as was the case in 2006.
He said that Fatah had responded positively to the Egyptian plan.
"We handed the Egyptians a very positive response before Id al-Fitr," he said. "We are prepared to reach understandings with all the Palestinian groups over the points mentioned in the plan, and not only with Hamas."
Abdullah said that he was optimistic that Hamas's response would also be positive.
Hamas has made it clear that the elections would be held only after a reconciliation accord was signed with Fatah.
Some Hamas officials also voiced optimism regarding the prospects of reaching an agreement that would end the movement's dispute with Fatah and pave the way for holding new elections.
The optimism was voiced on the eve of Hamas leader Khaled Mashaal's visit to Cairo, where he is scheduled to deliver his movement's response to the Egyptian initiative.
Barring last-minute obstacles, Mashaal will arrive on Sunday in Cairo at the head of a high-level delegation comprising Hamas officials from Syria, Lebanon and the Gaza Strip.
"Hamas is very keen on making the Egyptian initiative succeed," said Sami Abu Zuhri, a Hamas spokesman in the Gaza Strip. "The ball is now in the Fatah court."
Another Hamas spokesman, Fawzi Barhoum, said that although he was optimistic, "Hamas has a few reservations about the Egyptian plan."
He said the main points of difference focused on the timing and nature of the elections, the reconstruction of the Palestinian security forces and the continued campaign of arrests against Hamas supporters by forces loyal to Palestinian Authority President Mahmoud Abbas in the West Bank.
"Hamas is dealing with the Egyptian initiative seriously and we are doing our utmost to ensure its success," he said.
The plan calls for the establishment of a higher security committee to reform and reunite the Palestinian security forces in the West Bank and Gaza Strip. The committee would consist of "independent and professional" officers who would function under the supervision of Arab monitors.
With regards to the government, the Egyptian plan envisages the establishment of a committee representing all Palestinian factions to run the affairs of the Palestinians until the elections.
According to the plan, both sides would agree on a framework for the release of "political" detainees held in their jails in the West Bank and Gaza Strip.