Egypt has been mediating talks between rival Palestinian factions, but analysts say Cairo is trying to capitalise on the situation to re-establish itself as a regional powerhouse.
The Fatah-led Palestinian Authority (PA) wants complete control over the Gaza Strip, including its security, which means the disarmament of Hamas' armed wing the al-Qassam Brigades - a point that the Hamas movement has made clear it will not concede on.
Last month, Egyptian intelligence acted as a broker between the Gaza-based Hamas movement and Israel in indirect talks, in order to reach a gradual long-term ceasefire and prevent Palestinian discontent from boiling over.
Israeli security establishment is against another war, hoping that a ceasefire will lead to negotiations that will bring back the bodies of two Israeli soldiers that have been missing since the 2014 Gaza offensive.
Gaza Strip governed by Hamas is home to about two million people and has seen mass protests in the past several months against a decade-old Israeli sea and air blockade. More than 170 Palestinians have been killed since March 30 trying to cross the Israeli fence to commemorate the ethnic cleansing of Palestinians in 1948.
Cairo also has its own interests in stemming escalation in the besieged Gaza Strip, which it hopes will affect the restive Sinai region that has witnessed deadly attacks on Egyptian army and security personnel over the past few years.
However, the Hamas-Israel talks have raised the ire of PA, which runs government in the occupied West Bank. The PA accused Hamas of not serving national interests by not prioritising reconciliation. It also accused Hamas of aiding Israel's interests by entrenching the political division.
Palestinian President Mahmoud Abbas was incensed that his government should be left out in talks, maintaining that only the PA has the authority to negotiate peace with Israel.
In mid-August, the Palestinian president went as far as refusing to meet the head of Egyptian intelligence who was on a visit to Israel and was supposed to meet PA representatives.
Hamas said on Monday that the indirect ceasefire talks with Israel have halted, citing the PA's strong opposition.
Omar Ashour, associate professor of security studies at the Doha Institute for Graduate Studies, says Egypt is actively involved in the most contentious issue in the Middle East amid its gradual decline in regional influence.
"Influence over the Palestinians is one of very few remaining 'assets' that successive Egyptian regimes attempted to preserve," he told Al Jazeera.
"This is due to the decline of influence in other spheres, and the desperate need for 'strategic rents' -financial aid in exchange for geo-strategic positioning."
Ashour said that in past decades, Egypt enjoyed regional influence, benefiting from charismatic leadership under President Gamal Abdel Nasser's 'progressive republicanism,' a national or transnational project, and the anti-colonial struggle in the 1950s and 1960s.
"But even that has been notably declining, at the expense of rising regional soft- and hard-powers like Turkey, Iran, Qatar, Saudi Arabia and the UAE," he said.
Ehab Lotayef, the former president of the Egyptian Canadian Coalition for Democracy (ECCD), said that there are other reasons for Egypt's deep involvement in the quagmire of Palestinian politics.
"One of the gains for Egypt is intelligence," he told Al Jazeera. "It gets firsthand information about the internal Palestinian differences and [about] the main players on both sides."
This information, Lotayef continued, can be used as leverage with Israel or be passed to the Israeli government for a price or as a part of other deals.
"It can also use this information to create more internal conflict between Palestinian factions when the need arises, and it gives Egypt the ability to control and manipulate the leadership of both the PA and Hamas," he said.
Gaza dependency on Egypt
Egypt has long considered Hamas to be an offshoot of the outlawed Muslim Brotherhood movement, despite Hamas leaders denying any formal connection with it.
Hamas' hold on the Gaza Strip has been beset with an 11-year blockade, three devastating Israeli military offensives, and more recently, punitive PA measures such as refusing to pay for electricity and salaries to its own government employees in the besieged Strip.
The last act, coupled with a rising dissatisfaction among Gaza residents who face unemployment and poverty at an unprecedented level, is aimed at putting more pressure on the Hamas government in a bid to hand over control to the PA.
A World Bank report published on Monday says the Gaza economy is "collapsing" mainly due to the blockade. The report described the economy as being in "free fall", shrinking by six percent in the first quarter of 2018, and warned of "further deterioration since then".
While Egypt sees the PA as the sole legitimate government, but at the same time it wants to keep Gaza dependent on it, according to Ramallah-based political analyst Khalil Shaheen.
"Egypt backs the return of the PA to the Gaza Strip in a way that will envelop Hamas into its fold but prevent it from having a political decision-making role," Shaheen told Al Jazeera.
In the meantime, Egypt wants to make sure it can contain Hamas' influence and preserve the Strip's dependency by holding the keys to the southern border, but Shaheen said, fears that the United States' Middle East peace plan, touted as the "deal of the century", would inadvertently contravene its role.
"This plan places Gaza as a priority by seeking to deal with it as solely a humanitarian case, which the US and Israel see as strengthening the private sector in Gaza," Shaheen said, adding that this scenario does not favour Egypt in the long run.
"Egypt wants to find a solution to the humanitarian situation in Gaza, but does not want the Strip to leave the arena of its control, such as establishing a sea port in Cyprus which reportedly is part of the deal," he explained.
Egypt's relationship with Israel
Analysts agree that rather than overseeing the achievement of national reconciliation between Fatah and Hamas, Egypt's main interests lie in protecting or acting in accordance with Israeli interests, such as a regime change in Gaza.
In addition to that, Ashour said that the current Egyptian government's mid-to-long term objectives are enhancing influence over the Palestinian factions, and consolidating authority over the northeast Sinai with both Israeli and Palestinian help.
Egypt also seeks to "solidify its relationship with Israel, a critical partner in both the counterinsurgency campaigns in Sinai and on the regional and international stages," Ashour said.
"Egypt's goal is to protect the Israeli interests and security," he said. "It is clear who the current Egyptian regime has allied itself with."