A military incursion into Gaza to remove Hamas is needed if there is to be any real diplomatic process with the Palestinians, a senior Israeli diplomatic official said Thursday. According to the official, speaking prior to the imminent release of the Foreign Ministry's strategic assessment for 2008, as long as Hamas is in control of Gaza, there will be negotiations with the Palestinian Authority, but no real "diplomatic process." A diplomatic process requires the ability of both sides to compromise, something that Palestinian Authority President Mahmoud Abbas will be unlikely to do as long as Hamas controls Gaza, the official said. Despite post-Annapolis talk of reaching an agreement with the Palestinians by the end of 2008, the assessment will say that the prospects in the coming year are "bleak." However, it will also be clear from the document that this is not seen as a static situation, and that a willingness by Israel to show some movement with Syria and to strengthen Abbas by releasing security prisoners and stopping construction in the settlements could positively impact on the overall situation. The official said a major IDF incursion into Gaza would be "extremely costly," and that the trauma from last year's war in Lebanon was to a large extent preventing this type of operation from being carried out in the Strip now. The official said both Abbas and Egypt would welcome IDF action, but for obvious reasons would have to condemn it publicly. Egypt, according to the official, is increasingly viewing Hamas's control of Gaza as a fait accompli, and as a result is hesitant to confront the Islamist organization over arms smuggling. The assessment in Jerusalem is that Cairo's policy regarding Gaza is increasingly, "If you can't beat them, at least appease them," and that for this reason Egypt is not effectively battling the arms smuggling. Hamas was currently "testing" Israel, to see how much "it can take," the diplomatic official said. He also said the IDF's current actions were creating a level of deterrence. When reminded that six Kassam rockets hit Sderot on Thursday morning, despite the army's escalated action, he said that without the actions, that number could have been 20. The official said there was nothing to signal that Hamas Prime Minister Ismail Haniyeh might be interested in some kind of truce, adding that Hamas had made it clear that it had no intention of stopping its arms buildup via smuggling from Egypt or stopping terrorist attacks elsewhere. Regarding the bilateral Israeli-Palestinian negotiations, the official said Jerusalem had not yet made a decision regarding the establishment of working groups, something the Palestinians are pushing. As to Syria, the official said Damascus had made it clear that it didn't want to talk to Israel unless two conditions were first met: Israel saying it is willing to withdraw from the Golan, to the June 4, 1967, lines; and the US being fully involved in the process. Since neither of those conditions are likely to be met any time soon, the official said there was little chance of any progress on the Syrian track in 2008.