Abir Dandis, the mother of the two girls who were murdered in the Negev town of Al-Fura’a last week, couldn't find a police officer to listen to her warnings, neither in Arad nor in Ma’ale Adumim. Both police stations operate in areas where Israel wants to gather the Bedouin into permanent communities, against their will, in order to clear more land for Jewish communities. The dismissive treatment Dandis received shows how the Bedouin are considered simply to be lawbreakers by their very nature. But as a resident of the West Bank asking for help for her daughters, whose father was Israeli, Dandis faced the legal-bureaucratic maze created by the Oslo Accords.

The Palestinian police is not allowed to arrest Israeli civilians. It must hand suspects over to the Israel Police. The Palestinian police complain that in cases of Israelis suspected of committing crimes against Palestinian residents, the Israel Police tend not to investigate or prosecute them.

In addition, the town of Al-Azaria, where Dandis lives, is in Area B, under Palestinian civilian authority and Israeli security authority. According to the testimony of Palestinian residents, neither the IDF nor the Israel Police has any interest in internal Palestinian crime even though they have both the authority and the obligation to act in Area B.

The Palestinian police are limited in what it can do in Area B. Bringing in reinforcements or carrying weapons in emergency situations requires coordination with, and obtaining permission from, the IDF. If Dandis fears that the man who murdered her daughters is going to attack her as well, she has plenty of reason to fear that she will not receive appropriate, immediate police protection from either the Israelis or the Palestinians.

Dandis told Jack Khoury of Haaretz that the Ma’ale Adumim police referred her to the Palestinian Civil Affairs Coordination and Liaison Committee. Theoretically, this committee (which is subordinate to the Civil Affairs Ministry) is the logical place to go for such matters. Its parallel agency in Israel is the Civilian Liaison Committee (which is part of the Coordination and Liaison Administration - a part of the Civil Administration under the Coordinator of Government Activities in the Territories).

In their meetings, they are supposed to discuss matters such as settlers’ complaints about the high volume of the loudspeakers at mosques or Palestinians’ complaints about attacks by settlers. But the Palestinians see the Liaison Committee as a place to submit requests for permission to travel to Israel, and get the impression that its clerks do not have much power when faced with their Israeli counterparts. In any case, the coordination process is cumbersome and long.

The Palestinian police has a family welfare unit, and activists in Palestinian women’s organizations say that in recent years, its performance has improved. But, as stated, it has no authority over Israeli civilians and residents. Several non-governmental women’s groups also operate in the West Bank and in East Jerusalem, and women in similar situations approach them for help. The manager of one such organization told Haaretz that Dandis also fell victim to this confusing duplication of procedures and laws. Had Dandis approached her, she said, she would have referred her to Adalah, the Legal Center for Arab Minority Rights in Israel, which has expertise in navigating Israel’s laws and authorities.

John Kerry revealed his long-awaited plan for peace in the Middle East on Sunday, hinging on a $4bn (£2.6bn) investment in the Palestinian private sector.

The US secretary of state, speaking at the World Economic Forum on the Jordanian shores of the Dead Sea, told an audience including Israeli president Shimon Peres and Palestinian leader Mahmoud Abbas that an independent Palestinian economy is essential to achieving a sustainable peace.

Speaking under the conference banner "Breaking the Impasse", Kerry announced a plan that he promised would be "bigger, bolder and more ambitious" than anything since the Oslo accords, more than 20 years ago.

Tony Blair is to lead a group of private sector leaders in devising a plan to release the Palestinian economy from its dependence on international donors. The initial findings of Blair's taskforce, Kerry boasted, were "stunning", predicting a 50% increase in Palestinian GDP over three years, a cut of two-thirds in unemployment rates and almost double the Palestinian median wage. Currently, 40% of the Palestinian economy is supplied by donor aid.

Kerry assured Abbas that the economic plan was not a substitute for a political solution, which remains the US's "top priority".

Peres, who had taken the stage just minutes before, also issued a personal plea to his Palestinian counterpart to return to the negotiations.

"Let me say to my dear friend President Abbas," Peres said, "Should we really dance around the table? Lets sit together. You'll be surprised how much can be achieved in open, direct and organised meetings."

Thick locks hug the front gates of shuttered shops, now covered in graffiti and dust from lack of use. Only a handful of customers pass along the dimly lit road, sometimes stopping to check the ripeness of fruits and vegetables, or ordering meat in near-empty butcher shops.

“All the shops are closed. I’m the only one open. This used to be the best place,” said 64-year-old Mustafa Sunocret, selling vegetables out of a small storefront in the marketplace near his family’s home in the Muslim quarter of Jerusalem’s Old City.

Amidst the brightly coloured scarves, clothes and carpets, ceramic pottery and religious souvenirs filling the shops of Jerusalem’s historic Old City, Palestinian merchants are struggling to keep their businesses alive.

Faced with worsening health problems, Sunocret told IPS that he cannot work outside of the Old City, even as the cost of maintaining his shop, with high electricity, water and municipal tax bills to pay, weighs on him.

“I only have this shop,” he said. “There is no other work. I’m tired.”

Abed Ajloni, the owner of an antiques shop in the Old City, owes the Jerusalem municipality 250,000 Israeli shekels (68,300 U.S. dollars) in taxes. He told IPS that almost every day, the city’s tax collectors come into the Old City, accompanied by Israeli police and soldiers, to pressure people there to pay.

“It feels like they’re coming again to occupy the city, with the soldiers and police,” Ajloni, who has owned the same shop for 35 years, told IPS. “But where can I go? What can I do? All my life I was in this place.”

He added, “Does Jerusalem belong to us, or to someone else? Who’s responsible for Jerusalem? Who?”

Illegal annexation

Israel occupied East Jerusalem, including the Old City, in 1967. In July 1980, it passed a law stating that “Jerusalem, complete and united, is the capital of Israel”. But Israel’s annexation of East Jerusalem and subsequent application of Israeli laws over the entire city remain unrecognised by the international community.

Under international law, East Jerusalem is considered occupied territory – along with the West Bank, Gaza Strip and Syrian Golan Heights – and Palestinian residents of the city are protected under the Fourth Geneva Convention.

Jerusalem has historically been the economic, political and cultural centre of life for the entire Palestinian population. But after decades languishing under destructive Israeli policies meant to isolate the city from the rest of the Occupied Territories and a lack of municipal services and investment, East Jerusalem has slipped into a state of poverty and neglect.

“After some 45 years of occupation, Arab Jerusalemites suffer from political and cultural schizophrenia, simultaneously connected with and isolated from their two hinterlands: Ramallah and the West Bank to their east, West Jerusalem and Israel to the west,” the International Crisis Group recently wrote.

Israeli restrictions on planning and building, home demolitions, lack of investment in education and jobs, construction of an eight-foot-high separation barrier between and around Palestinian neighbourhoods and the creation of a permit system to enter Jerusalem have all contributed to the city’s isolation.

Formal Palestinian political groups have also been banned from the city, and between 2001-2009, Israel closed an estimated 26 organisations, including the former Palestinian Liberation Organisation headquarters in Jerusalem, the Orient House and the Jerusalem Chamber of Commerce.

Extreme poverty

Israel’s policies have also led to higher prices for basic goods and services and forced many Palestinian business owners to close shop and move to Ramallah or other Palestinian neighbourhoods on the other side of the wall. Many Palestinian Jerusalemites also prefer to do their shopping in the West Bank, or in West Jerusalem, where prices are lower.

While Palestinians constitute 39 percent of the city’s population today, almost 80 percent of East Jerusalem residents, including 85 percent of children, live below the poverty line.

“How could you develop [an] economy if you don’t control your resources? How could you develop [an] economy if you don’t have any control of your borders?” said Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, of “this kind of fragmentation, checkpoints, closure”.

“Without freedom of movement of goods and human beings, how could you develop an economy?” he asked.

“You can’t talk about independent economy in Jerusalem or the West Bank or in all of Palestine without a political solution. We don’t have a Palestinian economy; we have economic activities. That’s all we have,” Odeh told IPS.

Israel’s separation barrier alone, according to a new report by the United Nations Conference on Trade and Development (UNCTD), has caused a direct loss of over one billion dollars to Palestinians in Jerusalem, and continues to incur 200 million dollars per year in lost opportunities.

Israel’s severing and control over the Jerusalem-Jericho road – the historical trade route that connected Jerusalem to the rest of the West Bank and Middle East – has also contributed to the city’s economic downturn.

Separation of Jerusalem from West Bank

Before the First Intifada (Arabic for “uprising”) began in the late 1980s, East Jerusalem contributed approximately 14 to 15 percent of the gross domestic product (GDP) in the Occupied Palestinian territories (OPT). By 2000, that number had dropped to less than eight percent; in 2010, the East Jerusalem economy, compared to the rest of the OPT, was estimated at only seven percent.

“Economic separation resulted in the contraction in the relative size of the East Jerusalem economy, its detachment from the remaining OPT and the gradual redirection of East Jerusalem employment towards the Israeli labour market,” the U.N. report found.

Decades ago, Israel adopted a policy to maintain a so-called “demographic balance” in Jerusalem and attempt to limit Palestinian residents of the city to 26.5 percent or less of the total population.

To maintain this composition, Israel built numerous Jewish-Israeli settlements inside and in a ring around Jerusalem and changed the municipal boundaries to encompass Jewish neighbourhoods while excluding Palestinian ones.

It is now estimated that 90,000 Palestinians holding Jerusalem residency rights live on the other side of the separation barrier and must cross through Israeli checkpoints in order to reach Jerusalem for school, medical treatment, work, and other services.

“Israel is using all kinds of tools to push the Palestinians to leave; sometimes they are visible, and sometimes invisible tools,” explained Ziad al-Hammouri, director of the Jerusalem Centre for Social and Economic Rights (JCSER).

Al-Hammouri told IPS that at least 25 percent of the 1,000 Palestinian shops in the Old City were closed in recent years as a result of high municipal taxes and a lack of customers. “Taxation is an invisible tool…as dangerous as revoking ID cards and demolishing houses,” he said. “Israel will use this as pressure and as a tool in the future to confiscate these shops and properties.”

The former Israeli Foreign Minister Avigdor Lieberman, an ex-nightclub bouncer who became one of the country's most powerful and controversial politicians, faces career oblivion after being charged with corruption.

The Moldovan-born leader of the right-wing Yisrael Beiteinu ("Israel is our home") party had joined with Prime Minister Benjamin Netanyahu's Likud party to present a joint list for the general election on 22 January. The merger, designed to strengthen Mr Netanyahu's hand, could now cost him dearly.

Mr Lieberman was indicted at Jerusalem Magistrates Court today on charges of fraud and breach of trust. The 54-year-old is accused of engineering the appointment of an Israeli ambassador to Latvia as payment for a political favour related to another corruption case against Mr Lieberman.

He formally resigned as Foreign Minister two weeks ago after three stormy years in the post, in response to a milder indictment. At the time, he requested an expedited process in order to clear his name before Israel's election. It now seems unlikely that the trial will be concluded by then.

The revised indictment filed by the Israeli state prosecutor carries a charge of "moral turpitude" that would ban Mr Lieberman from holding public office for seven years. A key witness, according to the charge sheet, is the Deputy Foreign Minister Danny Ayalon, a former ally and party colleague who was dumped by Mr Lieberman from the election list, effectively ending his political career.

A spokesperson for Yisrael Beiteinu said Mr Lieberman "wants to see the matter quickly resolved in court".

Mr Lieberman's increasingly tangled legal predicament is likely to increase the problems facing Mr Netanyahu.

Far from strengthening his position, since merging the election lists of the two parties, polls predict their combined strength in the new Knesset will fall from 42 seats to 37 seats.

Likud appears to be losing support to the hardline pro-settler Jewish Home party headed by Naftali Bennett, a rising new star who, like Mr Lieberman, is a former chief of staff to Mr Netanyahu.

After years of financial depression amid violent confrontation with Israel, the West Bank city of Bethlehem is celebrating the beginnings of an economic revival.

The ancient city, built around the Church of the Nativity on Manger Square that marks the grotto where Jesus is believed to have been born, has recently been re-energised by a combination of overseas investment, micro-finance initiatives and a record-breaking tourism rush.

Despite its location just a few miles from Jerusalem, Bethlehem has been cut off from the city since 2003, when Israel hastily erected a security wall during the violence of the four-year-long second Intifada, or mass uprising, citing the need to protect Israeli citizens from Palestinian terror attacks.

Since then, tourism has ebbed during times of conflict and increased – if not exactly flowed – during times of relative peace.

For Bethlehem, the Christmas season has long been regarded as the backbone of the city's economy – a time when increased numbers of tourists bring work and money to the West Bank town – but local businesspeople are now heralding signs that its popularity may begin to stretch further across the year.

Changes in local banking practices initiated by the Palestinian Monetary Authority in 2010 are now bearing fruit, allowing young Palestinian entrepreneurs to take advantage of hundreds of millions of pounds in small-business loans to open new manufacturing and services companies.

Jevara Kharoufeh, who left the family business of carving crucifixes and other religious mementos from local olive wood, successfully launched DejaVu – the city's first bowling alley with a 300-seat restaurant, bar and conference centre – in August with the help of a series of loans.

Mr Kharoufeh was keen for his enterprise to create a new experience for the town's youth.

"We cannot get easily to Jerusalem or Ramallah, so we need to create our own nightlife here in Bethlehem," he said. But it was also intended to give Bethlehem residents new hope of overcoming the high level of unemployment, which many blame on the ban on most Palestinians crossing into Israel to work. DejaVu employs 40 local people, rising to 70 during Ramadan.

The town's new mayor, Vera Baboun – the first woman to hold the post– told The Independent: "In Bethlehem we have the highest rate of unemployment in the West Bank – 18 per cent. We hope that with the change in city council we can look to a better situation."

The Chamber of Commerce, together with the Franciscan Custody of the Holy Land and the Italian Consulate, have awarded more than 20 micro-finance loans of up to €7m (£5.7m), interest-free, to small business owners such as Abeer Karam.

The Catholic Church has been one of the main organisations to encourage investment, hoping to stem Christian migration from the area and to help Bethlehem's residents overcome the economic crisis.

Ms Karam was born to a Palestinian family in Kuwait and was expelled when Saddam Hussein invaded the Gulf state in 1991. On arriving in Bethlehem she opened a dressmaking and repair business that employed one full-time assistant plus three seamstresses working from their homes.

After receiving a San Miniato micro-loan, she has doubled the space she rents in the El Khoudri Tijari Centre in Bethlehem's Old City, bought a steam press and replaced her old sewing machine with four new ones. She now employs three full-time assistants and 25 homeworkers. Her wedding dresses, combining traditional Palestinian and Bedouin needlework with modern fabrics, sell for up to £800 each to customers from around the world.

The financial incentives have also given rise to social enterprises. Nancy and Susan Atallah used their San Miniato loan to open Diva, a coffee shop where single young women, who mostly stay at home after dark, in accordance with Bethlehem's strict traditional social codes, can spend an evening in safe surroundings without igniting harmful gossip.

New additions to the town's fledgling entertainment industry only boosts tourism, and vice versa. Foreign tourists must pass through Israel or the Israeli-controlled border crossing from Jordan, to visit Bethlehem. Shopkeepers and café owners have long lamented that organised day tours to Bethlehem from Israel – the most common way for tourists to visit – were costing their businesses dearly.

Now, as foreign tourism to Israel has increased to record levels, so have visitors to Bethlehem, pushing up demand for trips that last longer than one day, and so lifting income.

Samir Hazboun, the chairman of the Bethlehem Chamber of Commerce, says 13 new hotels in the past five years – with two more opening in 2013 – have increased the number of rooms from 1,000 to 5,000. The increase in hotel rooms has resulted in a record 1.8 million overnight tourism stays this year – a 25 per cent increase on 2011.

"There is a very high trend in opening new restaurants, coffee shops and hotels," Dr Hazboun said. "It's a chain. If you open a new hotel it helps the baker, the butcher, the dry-cleaner and everyone who provides services."

However, despite the excitement of new projects and cash injections, Bethlehem's economy remains fragile, and is sensitive to political upheaval. During the week-long Israeli assault on Gaza in November, which killed more than 160 people, West Bank hotels closed and laid-off workers and hundreds of Christmas reservations were cancelled.

On Star Street, the traditional gateway to the old city, 87 of the 102 shops have been closed since the Intifada began in 2000. Restrictions on movement resulting from the Israeli security barrier have cut off hundreds of families from thousands of acres of land, reducing their income and contributing to poverty and unemployment. The failure of the Palestinian Authority to pay government salaries – because of Israel's refusal to transfer tax funds – also reduces local spending power.

On Manger Square, 27-year-old Nabil Giacaman works at Christmas House, the olive-wood factory outlet founded by his grandfather Elias in 1925. Mr Giacaman's family arrived from Italy with the crusaders in the 14th Century. While he acknowledges the improving economic conditions in recent years, the isolation from Jerusalem and the uncertain future of relations with Israel still loom large.

"I have the right to live in freedom without walls and without checkpoints," Mr Giacaman said. "They took ten acres of our olive groves when they built the wall. I have a permit to go through but I can't haul the harvest back without workers, and who knows when the soldiers might open fire? I don't want to die for olives."

Nor does he expect any great improvement after the Israeli elections in January, the results of which are unlikely to change the blockades and the financial penalties imposed by Israel on the West Bank.

"I'm 100 per cent for peace, but I don't hold out much hope," he said. "I don't expect the elections will have any effect on Israeli policies. History says there has been war here since the time of Jesus. We have a saying here: The land of Jesus will always cry."

From the roof of City Hall in Ma'ale Adumim, municipality spokesman Hezki Zisman has a glorious view in all directions that doubles as a basic geography primer on the Israeli-Palestinian conflict.

From a distance, the undulating hills, Bedouin encampments and limestone villages rising to the tower-topped mountains of Jerusalem radiate a natural beauty that seems to provide a storybook setting for peace. On closer inspection, the landscape is dotted with military checkpoints and bisected by a concrete security barrier to halt the passage of would-be suicide bombers into Israeli-controlled territory.

As both sides search for the elusive formula that might defuse the conflict that divides the residents of neighbouring hills, recent plans announced by Israel have raised fears that the delicate political tapestry of this complex landscape will be permanently altered.

To the west, the outskirts of East Jerusalem cascade over the Mount of Olives into the deep valley that divides this large West Bank settlement of 40,000 residents from the nearby Israeli capital. To the south lies Abu Dis, a Palestinian-controlled village and home of Al-Quds University, where Yasser Arafat constructed a parliament building for the future state of Palestine only to see it sealed off from neighbouring Jerusalem by the 30-foot high Israeli security wall. To the east, the spectacular folds of the Judean desert plunge 700 metres towards Jericho and the Dead Sea before the horizon soars again up to Amman and the Mountains of Moab.

But Mr Zisman's focus today is to the north, across the main highway leading from Jerusalem to Jericho, where the mayor of Ma'ale Adumim unveiled a plaque in September 2009 renaming the five-square-mile plot of largely barren hillsides as the settlement's newest neighbourhood, Mevasseret Adumim.

"There is no more land, no other area for Ma'ale Adumim to expand in any direction," Mr Zisman says. "It's important because we want to come close to Jerusalem. It's a strategic place for the country. It sits on the main road."

The area, known as E1, has remained almost deserted despite the mayor's plaque. A single winding road dotted with roundabouts leads to the only permanent building, a heavily fortified regional police HQ opened in 2008. There are street lights, electricity cables and water mains, but no houses. Plans to build 3,900 homes have been frozen by international pressure since 2004. A bridge linking the area to the mother settlement across the highway constructed a decade ago has been blocked by boulders.

The Palestinians consider E1 a vital land bridge linking Ramallah and Nablus in the northern West Bank to Bethlehem and Hebron in the south. Its border would allow the future Palestinian state one of its few points of strategic contact with East Jerusalem.

"If implemented, these plans would alter the situation on the ground on a scale that makes the two-state solution, with Jerusalem as a shared capital, increasingly difficult to achieve," says Foreign Secretary William Hague.

But last week, Israel defied international objections and revived the E1 development plan in response to the PLO's successful upgrade of its mission at the United Nations to the position of a non-member state.

Israeli Prime Minister Benjamin Netanyahu said yesterday: "Everybody understands that these suburbs are going to remain part of Israel as a final settlement of peace. The same applies to the narrow corridor that connects Ma'ale Adumim to Jerusalem. This was part of all the plans."

He added: "You'll have a Palestinian state between Gaza and Judea-Samaria, the West Bank, and they are divided by 60 kilometres. That doesn't preclude a Palestinian state, but the fact that Ma'ale Adumim will be connected to Jerusalem in a corridor that is two, three kilometres long, that somehow prevents a Palestinian state. That's not true. It's simply false."

But Abdullah Arare, a Bedouin shepherd tending his flock of 450 goats with his daughter on a hill in E1 overlooking the police station, is certain the Israeli prime minister is wrong.

"This is Palestinian land. If they build here, there will be no peace," says Mr Arare. "How can we build a state without land? This is the link between the cities in the north and the south."

A few miles to the west, close by the security wall that marks the border with Jerusalem, Ibrahim Saidi, his four wives, 30 children and numerous grandchildren, graze their 1,000 sheep and goats and nine camels on the other side of E1. "We have been here for 50 years," says Mr Saidi. "If they build here, we will be unable to graze our flocks and I will have to double the amount of feed I buy for the animals. I can't afford it. I'll have to sell the flocks and stop being a shepherd."

In the neighbouring patch of land just across the wall in occupied East Jerusalem, there is a similar fear of upheaval.

Jadua Al-Kurshan, 55, lives in a valley under the north Jerusalem neighbourhood of French Hill, known in Arabic as Kurshan and in Hebrew as Nahal Og. The community of 17 families, about 90 people, is the last remaining Bedouin encampment within the municipal boundary of Jerusalem. On 1 November, the local planning committee published Plan 13900 advocating the removal of Mr Al-Kurshan's community so the valley can be used as an industrial waste landfill before being landscaped into a new public park.

It is not the first time the Jerusalem authorities have tried to move the Bedouin. The area was an empty space miles from the city when they first moved there in the 1970s. Now the new Israeli suburbs built across the pre-1967 border are creeping towards them.

"Four years ago the municipality gave us an eviction order. We went to court and won. They were told they couldn't remove the people because they didn't have enough evidence to enforce the order," Mr Al-Kurshan says.

The Jerusalem Municipality says Plan 13900 is the result of years of research into possible locations for a badly needed dump that will afterwards be beautified for the benefit of all residents. "There are illegal buildings on the site that have been the subject of legal proceedings," says a spokesman. "The court decided that the moment the municipal building plan was approved the demolition orders would be enforceable."

Sari Kronish, an architect at Bimkom, a group that raises human rights issues in planning procedures in Jerusalem, says the environmental arguments in favour of a landfill and park disguise a policy in which parks are being used to close off development opportunities for Palestinians in East Jerusalem.

"I'm concerned at the complete disregard for the people who live there at the moment and the fact that the plan does not include any alternative solution for the people who have livelihoods in this area," says Ms Kronish.

A Bimkom report on plans for national parks in Jerusalem suggests the motivation is as much political as environmental. "Their intention is to curb the development of the Palestinian neighbourhoods in East Jerusalem," says Ms Kronish.

In the Kurshan/Nahal Og valley, the implications of that policy flow beyond the municipal boundary. The Israeli land barrier that Palestinians fear will destroy the geographical integrity of their future state and weaken its physical connection to Jerusalem begins in Kurshan, which connects directly to E1 and from there to the settlement of Ma'ale Adumim.

Khaled Meshaal, the political leader of Hamas, ended decades of exile, falling to his knees and kissing the ground as he arrived in Gaza on a visit which many Palestinians hope could help mend the rift with his political rivals in Fatah.

His return to Palestinian territories follows an eight-day conflict last month between Hamas and Israel, in which 170 Palestinians and six Israelis were killed. The two sides reached a ceasefire and Israel – whose agents tried to assassinate Mr Meshaal in 1997 – is understood to have given tacit agreement to the visit.

But security was tight in Gaza and Israeli officials were offering no guarantees of safe passage. A foreign ministry spokesman said Israel did not differentiate among Hamas leaders. "Hamas is Hamas is Hamas," said spokesman Yigal Palmor.

Shortly after arriving over the Rafah border crossing from Egypt, Mr Meshaal announced his "re-birth". He then prayed with his deputy, Moussa Abu Marzouk, before embracing and kissing dozens of political, religious and militant leaders. "This is a victory for the Palestinian people and his leadership inside Palestine and outside," said his host, Hamas Prime Minister, Ismail Haniyeh. In a rare display of unity, senior Fatah officials joined the reception committee.

Mr Meshaal has been living in exile since the Six-Day War with Israel in 1967 forced his family to flee, but managed to build Hamas into a strong force from exile. His return reflects a growing regional acceptance for Hamas as the Arab Spring sweeps more sympathetic governments into power.

Under Hosni Mubarak, Egypt had bowed to Israeli demands to block Mr Meshaal's passage into Gaza. But his successors in the Muslim Brotherhood have hardened their stance towards Israel, while offering more co-operation to Hamas.

Mr Meshaal's historic visit has for now papered over deep divisions within Hamas over the Islamic group's future strategy towards Israel and the thorny question of future co-operation with Palestinian President, Mahmoud Abbas, whose Fatah movement governs parts of the West Bank after Hamas expelled them from Gaza in 2007. Mr Meshaal vowed to push for unity – the wish of many ordinary Palestinians in both Gaza and the West Bank. "This is a promise from the leadership of Hamas. We will press ahead with reconciliation to end divisions and to stand united against the Zionist occupation," he said.

Surrounded by dark-suited security men with earpieces, Mr Meshaal inspected the wreckage of the car in which the Hamas military chief, Ahmed al-Jabari, was assassinated by Israel last month. He was also expected to visit the home of Sheikh Ahmed Yassin, the Hamas spiritual leader assassinated by Israel in 2004, before participating in a huge rally today to mark the 25th anniversary of the founding of the Islamic Resistance Movement. He will leave shortly after.

In his first public comments, Mr Meshaal derided Israeli Prime Minister Benjamin Netanyahu for endorsing a failed attempt on his life in Amman in 1997. "This is … my third birth. The first was my natural birth in 1956, the second was in 1997, when there was an attempt by the crazed Netanyahu to assassinate me, and this one on the 7th of December 2012. The fourth birth will be in liberating Palestine, in Ramallah, Jerusalem and Haifa and Jaffa," he declared to an audience of dignitaries, security personnel and media.

Mr Meshaal's wife arrived on Thursday, accompanied by more than a dozen family members and Hamas officials. Leaders of Islamic Jihad had hoped to join the commemoration but Israel said that would be a violation of the ceasefire agreement and threatened to assassinate them if they entered Gaza.

Before his guest's arrival, Mr Haniyeh was asked whether he feared Israel might attempt to kill Mr Meshaal. "We don't rule out any foolish behaviour by the Israelis but our people in its steadfastness, and the resistance with its high capabilities, will make the occupation think dozens of times before committing any foolish step. Under the shadow of our guns, the occupation won't be able to hurt any of our leaders," he declared.

Saturday's rally is not being held on the exact date of Hamas's founding, but on the 25th anniversary of the start of the first Palestinian uprising against Israel. The choice is being seen as a new willingness to seek reconciliation with President Abbas, who hosted King Abdullah of Jordan in Ramallah on Thursday in an apparent attempt to re-direct some of the limelight from Gaza.