Israel was scheduled to begin cutting back on the electricity it sends to the Gaza Strip this week, following the Palestinian Authority’s decision to stop funding the supply.

The Israeli government has announced that it will not intervene in the “internal dispute” between the PA and Hamas, which has led to the decision to end the payment for electricity. However, behind the scenes it has been trying to find an Arab government prepared to take over the funding.

Cutting electricity is part of how Palestinian president Mahmoud Abbas applies economic pressure on Hamas rule in Gaza. The PA is to curtail funding for health and education in Gaza and to stop paying the salaries of tens of thousands of civil servants there. Other Arab nations are unwilling to help Gaza at this point, as they are also pressuring Hamas to sever ties with both Qatar and Iran.

The pressure appears to be having unexpected consequences. In talks held in Cairo over the last two weeks, Hamas’ new prime minister in Gaza, Yihya Sinwar, and former Fatah security chief Mohammad Dahlan, have reportedly reached a deal whereby Mr Dahlan will head a new committee in charge of Gaza’s foreign relations and border security.

The agreement will be endorsed by Egypt, which supports Mr Dahlan and is eager to see Hamas close Gaza’s border to local Isis fighters. As part of such an agreement, it is thought that Egypt would help solve the electricity shortage.

A Hamas-Dahlan deal could pose a dilemma for Israel. On the one hand it is in favour of isolating Hamas and keeping up the pressure on Gaza. However, Mr Dahlan has a back-channel to Israel's leadership, including to defence minister Avigdor Lieberman, and Israel is anxious to maintain a close cooperation with Egypt over Gaza.

While Israel is wary of an alliance between Mr Dahlan and Hamas’ new hardline chief Sinwar, it could hopefully reduce tensions around Gaza in the short-term, making Israel unlikely to object. It will however seek assurances that any opening of the Rafah crossing will be regulated by both Egypt and forces loyal to Dahlan, to prevent Hamas smuggling more arms in to Gaza.

One regional player who will see such a deal as a direct threat is President Abbas. Mr Dahlan is one of his main rivals within Fatah, the largest faction currently ruling the PA. If Mr Dahlan succeeds in both alleviating the economic and electricity crises in Gaza and creating a channel for Hamas to Egypt, it will mean Mr Abbbas’ plan of putting pressure on Hamas will have failed.