Yasser Arafat, Chairman of the Palestine Liberation Organisation, and Shimon Peres, the Israeli Foreign Minister, will hold talks in Davos from Saturday in an attempt to settle outstanding security questions relating to the withdrawal, which was due to have begun on 13 December.
The hope of a breakthrough springs more from a sense that time is running out than from evidence that differences have been resolved. Officials on both sides have become increasingly nervous in recent days as evidence has grown of a serious erosion of confidence in the agreement with the continuing delay in withdrawal.
Confidence is being eroded not only among the Palestinian and Israeli public but among politicians and officials associated with the agreement.
As expectation of a breakthrough mounted in Israel this week, Mr Peres yesterday attempted to dampen hopes, saying: 'I would not put all my fortunes in one weekend.'
However, one Israeli negotiator associated with drawing up the September Declaration of Principles predicted yesterday that the Davos meeting will be 'make or break' for the peace agreement. 'I believe we have to solve the problems soon or confidence will collapse,' he said.
Under the September declaration, withdrawal from Gaza and Jericho was to have been completed by 13 April. In parallel with this withdrawal, power was to have been transferred to a new Palestinian authority in the rest of the West Bank, also to be completed by the April deadline. Talks on autonomy for the rest of the West Bank would then start.
Even if there is a deal in Davos, it now seems unlikely that withdrawal can be completed by 13 April. The transfer of powers to the rest of the West Bank in this period has already been abandoned.
The main disagreement between the two sides remains the question of control at the border crossings into the Jericho enclave and Gaza.