Egypt's new president holds the key to blockaded Gaza, but he is signaling that he won't rush to help the territory's Hamas rulers by striking a border deal with them, even though they are fellow members of the region's Muslim Brotherhood.
A bilateral border agreement between Egypt and Hamas could hurt chances of setting up a single Palestinian state, made up of the West Bank and Gaza, alongside Israel.
"I don't think they (the Egyptians) are ready for that," said Palestinian economist and business leader Samir Hulileh.
Hamas was jubilant over Morsi's election in neighboring Egypt in June, hoping the Egyptian leader would lift years of travel and trade restrictions that have hit the Gaza economy hard.
But for now Morsi is keeping Hamas at arm's length, focusing on his relationship with Egypt's powerful military and with the U.S., which gives Egypt $1.3 billion in annual military aid.
In Gaza, Hamas officials say that once Morsi settles into his job, they expect him to transform the Gaza-Egypt border crossing, now open only to select passengers, into a vibrant cargo route with free trade zones.
Such a new lifeline could keep Hamas in power for years, reviving an economy battered by a border closure Israel and Morsi's pro-Western predecessor, Hosni Mubarak, imposed after the violent Hamas takeover of Gaza in 2007.
One senior Hamas official said Gaza now has the chance to become semi-independent by relying on close relations with Egypt and cutting the last ties to Israel. The official spoke on condition of anonymity because he was expressing a personal view.
Israel might welcome closer ties between Egypt and Gaza, since this could further ease its responsibility toward the seaside territory. However, Israeli officials insisted there is no change in the current policy of isolating the territory and containing Hamas.
Israel, which withdrew from Gaza in 2005 after 38 years of occupation, still controls most of Gaza's land border, including several crossings, and restricts access by air and sea.
Among those most affected by a separate Egypt-Gaza deal would be Palestinian President Mahmoud Abbas, who was left with limited autonomy in parts of the West Bank after Hamas seized Gaza from him.
A strong trade bond with Egypt could break Gaza's last tentative ties with the West Bank, further hurting Abbas' efforts to establish a state in both of those territories, along with east Jerusalem.
"This is a very dangerous step," Abbas aid Mohammed Ishtayeh, said of Hamas' appeal to Egypt. "It would be the end of the two-state solution," he said.
For Hamas, that might be of little concern. The Islamists view such a state at best as an interim step toward an Islamic entity in all of historic Palestine, the area between the Mediterranean and the Jordan River that includes Israel.
Morsi has signaled that there will be no radical changes anytime soon.
The Egyptian leader reiterated in a weekend meeting with U.S. Secretary of State Hillary Rodham Clinton that he would honor all of Egypt's international obligations.
He has also avoided preferential treatment of Hamas. This week, he'll receive Abbas in Cairo, while Hamas leaders are still waiting for their invitation.
Still, Egypt's continued role in the Gaza blockade is deeply unpopular in Egypt, and Morsi has promised a new policy.
Muslim Brotherhood spokesman Mahmoud Ghozlan said Morsi will not lend a hand to "choking Gaza." Ghozlan spoke of easing passenger traffic at the Rafah crossing on the Gaza-Egypt border, and sending more humanitarian supplies. But he was evasive when asked about Hamas' central demand that Egypt allow regular trade.
Morsi would like to lift the blockade, but is worried about violating international protocols, said Egyptian security officials familiar with Gaza policy, speaking on condition of anonymity in line with regulations.
This includes a border deal brokered by the U.S. after Israel's 2005 withdrawal from Gaza, when Abbas' forces still controlled the territory. The agreement was meant to address Israel's fears that Gaza would be flooded with weapons and militants.
A complicated arrangement was worked out that enabled Israel to watch the border crossing by remote cameras. It did not contain a provision for full-fledged Egypt-Gaza trade. Instead, Egypt sent its goods via an Israel-run cargo crossing into Gaza.
This also helped protect the customs union between Israel, Gaza and the West Bank, a component of interim Israeli-Palestinian peace deals of the mid-1990s.
Since the blockade was imposed in 2007, Gaza has been importing hundreds of millions of dollars in goods through underground smuggling tunnels under the border with Egypt — a major source of tax revenue for Hamas.
The border closure and the smuggling meant the customs union existed only on paper. Still, it was one of the last formal bonds between Gaza and the West Bank, since Israel had previously banned virtually all travel between the territories.
If Morsi were to allow Egypt-Gaza trade, it would formally break the customs union and allow Israel to "unload" Gaza, said Ron Pundak, a former Israeli peace negotiator. Even seven years after its withdrawal, Israel is held largely responsible for Gaza because it controls access.
"Undoubtedly, this will be a pretext for Israel to claim that there is no more de jure occupation of the outer borders of Gaza," Pundak said. "There are those in Israel who would say, 'Bye bye Gaza, not our problem anymore'."
Such sentiments are driven by a violent history. Hamas has killed scores of Israelis in bombings and shootings, and has fired thousands of rockets and mortar shells from Gaza. Three years ago, Israel killed hundreds of Gazans in a war meant to stop the rockets.
Last month, a former top Israeli security official, Giora Eiland, called for dramatic change. He said Israel should recognize Gaza as a "de facto" state, albeit a hostile one.
This would allow Israel to cut all ties, he said. In the event of attacks from the territory, Israel would enjoy more leeway to respond, argued Eiland.
Israeli Foreign Ministry spokesman Yigal Palmor said Hamas continues to pose a huge security risk to Israel, in part because it receives weapons and funding from Israel's arch foe, Iran. "Even if we close the border, Gaza is not going away," he said.
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