U.S. and Mideast mediators appeared optimistic in recent days that they were closing in on a deal for a two-month cease-fire in Gaza and the release of over 100 hostages held by Hamas.

But on Tuesday, Israeli Prime Minister Benjamin Netanyahu rejected the militant group’s two main demands — that Israel withdraw its forces from Gaza and release thousands of Palestinian prisoners — indicating that the gap between the two sides remains wide.

The war began with Hamas’ Oct. 7 assault into Israel, in which militants killed some 1,200 people, mostly civilians, and abducted around 250. Nearly half the hostages were released during a weeklong November cease-fire in exchange for 240 Palestinian prisoners.

Israel’s offensive has killed over 26,700 Palestinians, according to the Health Ministry in Hamas-ruled Gaza, whose count does not separate civilians from combatants. Some 85% of Gaza’s population of 2.3 million have fled their homes and the U.N. says a quarter of the population is starving.

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It has also sent ripples across the region, with Iran-backed groups in Lebanon, Syria, Iraq and Yemen attacking Israeli and U.S. targets in support of the Palestinians, drawing reprisals in a spiraling tit-for-tat that could set off a regional conflagration.

Here’s a look at where each of the parties stand on ending the conflict.

ISRAEL’S NETANYAHU SEEKS ‘TOTAL VICTORY’

Netanyahu has repeatedly vowed to continue the war until Israel destroys Hamas’ military and governing capacity and returns all the hostages, two increasingly elusive goals that many Israelis fear are mutually exclusive.

Speaking at a religious pre-military academy in the occupied West Bank on Tuesday, he said “we will not withdraw the Israeli military from the Gaza Strip and we will not release thousands of terrorists.”

That would seem to rule out any agreement with Hamas, but it could also be posturing aimed at strengthening Israel’s hand in the ongoing indirect talks.

Netanyahu is under mounting pressure from families of the hostages and the wider public to reach a deal with Hamas to bring the captives home. Many Israelis fear time is running out.

At the same time, his governing coalition — dominated by ultranationalist hard-liners who oppose a deal — could fall apart if he is perceived as being too soft on Hamas.

Israel’s military has only successfully rescued one hostage, and Hamas says several have been killed in airstrikes or during failed rescue operations. In December, Israeli forces mistakenly killed three hostages who had escaped and were waving a white flag.

HAMAS WANTS THE WAR TO END

Hamas has refused to release more hostages until Israel ends its offensive and withdraws from Gaza. It wants a broader agreement that would include a long-term truce and reconstruction.

The group’s top political leader, Ismail Haniyeh, said Tuesday that its priority is the “full withdrawal” of Israeli forces from Gaza. He said any agreement should also lead to reconstruction, the lifting of an Israeli-Egyptian blockade on the territory, and the release of “all our heroic prisoners.”

Hamas is widely believed to be holding the hostages in heavily guarded tunnels deep underground, using them as human shields for its top leaders and bargaining chips for the release of thousands of Palestinian prisoners. These include high-profile militants involved in attacks that killed Israeli civilians.

If Hamas releases the hostages without ending the war, it would leave itself exposed to an even greater Israeli onslaught once any cease-fire expires. Failing to secure a major prisoner exchange would expose it to intense criticism from Palestinians after the unprecedented death and destruction in the tiny coastal enclave prompted by its Oct. 7 attack.

On the other hand, if Hamas secures a long-term cease-fire, the withdrawal of Israeli forces and the release of thousands of prisoners, it would be seen as the war’s victor, at least by its own supporters.

MEDIATORS SEEK MIDDLE GROUND

The United States, which has provided crucial military aid for the offensive, largely supports Israel’s goals in the war. It wants all hostages released and assurances that Hamas can never again carry out an attack like the one on Oct. 7.

But the Biden administration also has a strong interest in winding down a war that has caused regional instability and divided Democratic voters in an election year.

Arab countries, including key mediators Egypt and Qatar, have been calling for a cease-fire since the earliest days of the war, fearing broader instability.

The U.S. and Arab mediators appear to be seeking a middle ground in which hostages would be released in stages over a two-month period in exchange for Palestinian prisoners, more desperately needed humanitarian aid would be allowed into Gaza, and Israeli forces would partially withdraw.

A two-month respite could buy time for negotiating a larger agreement to address the decades-old Israeli-Palestinian conflict.

U.S. and Arab diplomats have spoken of a potential grand bargain in which Saudi Arabia would recognize Israel and join other Arab countries and the Western-backed Palestinian Authority in helping to rebuild and govern Gaza, in return for a credible path to the creation of a Palestinian state alongside Israel.

But Netanyahu, whose government is opposed to Palestinian statehood, and Hamas, which refuses to recognize Israel, have ruled that out as well.

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