The conversation Egyptian president Hosni Mubarak and Palestinian Authority chairman Mahmoud Abbas held at Sharm e-Sheikh Tuesday July 14 was more like a shouting match, DEBKAfile's Middle East sources disclose. They got together at the non-aligned summit to review the latest Egyptian proposals for laying to rest the feud between Abbas' Fatah and its rival Hamas, and so remove the biggest obstacle to peace talks with Israel and the Obama administration's Middle East plans.

The conversation ended with Abbas throwing back in Mubarak's face the proposals Cairo drafted after an Egyptian intelligence delegation made the rounds of Tel Aviv, Damascus and Ramallah last week.

According to our sources, Cairo informed all the concerned parties that it had given up on Palestinian reconciliation and a power-sharing deal for reuniting the West Bank and Gaza Strip. The Egyptian plan - as presented to Israel, Syria and the Palestinian Authority – was to form two security commissions to supervise Palestinian security and intelligence forces in the West Bank and Gaza Strip respectively and represent the Palestinians in diplomacy with the Americans and the Israelis.

The West Bank commission would have three Fatah members and one Hamas member, while the Gazan commission would have 3 Hamas and one Fatah member, so representing their respective strength in the two entities.

Cairo also proposed creating a new 3,000-strong Palestinian security service with a half-and-half Fatah-Hamas membership to assume responsibility for and reopen the Gaza Strip crossings, thus lifting the Israeli blockade on the territory.

But the Palestinian leader Abbas sharply rejected the plan, accusing Egyptian leaders of "perpetuating the Ismail Haniyeh regime" in Gaza. "Don't even think of presenting this plan to President Obama," he said.

Abbas' extreme antagonism to the last of many Egyptian proposals also touched on the infighting within his own Fatah. The PA chairman is trying desperately to convene the first Palestinian Congress in a decade in Bethlehem on Aug. 2, under his leadership. He cannot afford to stand before his movement with a plan endorsing the fragmentation of Palestine into two rival entities.

Farouk Kadoumi, a Fatah veteran who still holds the title of PLO foreign minister, threw a spanner in the works this week by objecting to the congress being convened in "Israeli-occupied territory." He also claimed to have documents alleging that Yasser Arafat had discovered Mahmoud Abbas had conspired with the Israeli prime minister at the time, Ariel Sharon, to assassinate him. Arafat was said to have discovered the plot in 2004, 11 months before his death.

Although the Fatah Central Committee denied the claim as "full of lies" and a smear campaign to destroy party unity, it spread through the West Bank this week like wildfire, further undermining Abbas' already feeble control of the territory.