The issue is the border of Gaza and Egypt, the philadelphi corridor. Israel wants to control it or at least have some presence there.
Thats because a lot of Hamas(and non Hamas palestianians) fled to Egypt. And once Israel pulls out, Israel doesnt want Hamas or military supplies to flow back into Gaza.
The american proposal offered reduced israeli presence in the area, with the Palestinian Authority managing it and Israel “supervising”.
Hamas rejected the proposal because they dont think Israel should be in Gaza in any capacity.
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