On Wednesday Shimon Peres, the Israeli Foreign Minister, suggested there had been a 'meeting of minds' which had led to an agreement in Cairo over how Israel should withdraw from Gaza and Jericho. In particular, he suggested a deal had been struck over the most contentious issue: who should have control at the external border crossings.
However, the PLO yesterday dismissed Israel's claims as 'bluff', saying there had been no such 'joint agreement'. Mr Peres was accused of trying to bounce the PLO into a deal by leaking the Israeli draft terms to the Israeli press. The draft showed that Israel had relinquished its demand for sole control at the crossings, by agreeing that the Palestinians should have a presence, yet insisting that Israel should have a veto over who should enter.
Mr Arafat has made clear that he will continue to demand overall control at the crossings and reject an Israeli veto. Otherwise the Palestinian authority would be an Israeli puppet and the Palestinian leadership would lose all credibility, say his aides.
Last night it was unclear where the talks can go from here. It was announced that the negotiations are to start again next week in Taba, the Red Sea resort. However, the Taba talks are only at official level and are unlikely to bring agreement where the ministerial-level Cairo talks failed.
'The ball is in Arafat's court,' was all government officials said last night. But from Tunis came remonstrations that PLO counter-proposals would soon be issued, placing the ball back in Israel's court.
Mr Arafat's bargaining position has not been helped by signs that his autocratic style is creating dissent in the Palestinian camp. On Sunday a delegation of influential Palestinians is to travel to Tunis, led by Haidar Abdul Shafi, the former head of the negotiating team, to call on Mr Arafat to introduce democratic accountability into the PLO and listen to different Palestinian voices.
The delegation represents 118 prominent Palestinians from inside and outside the occupied territories, including Arafat supporters, who have signed a petition demanding changes. The petitioners are not directly criticising Mr Ara fat's position. Nevertheless, they are openly critical of his failure to consult on policy and appointments, saying the leadership is acting in a way which is 'close to improvisation'.
The petition urged creating a non-political body to shadow the executive committee, the PLO's key decision-making body since its formation 30 years ago.
This week's developments have exposed the fragility of the September peace agreement. The failure to agree on who controls border crossings has exposed fundamental differences between the two sides over how much real authority should be handed to the Palestinians in the first stage.
Assuming the agreement can be put into effect, there is mounting concern whether Mr Arafat and the PLO, as presently constituted, will guarantee the type of self-rule desired by the Palestinians.
The mounting problems have not yet led to a sense of crisis in the occupied territories. The agreement set a strict deadline for withdrawal to be completed by 13 April. However, there is a growing realisation in Palestinian political circles that it will take time to reach agreement.