Prime Minister Benjamin Netanyahu has agreed to restart peace negotiations with the Palestinians using the pre-1967 borders as a baseline for a final status peace agreement, according to Israeli media.
Officials in Netanyahu's office told various newspapers that the proposal is actually a package deal that also requires the Palestinians to recognize Israel as a Jewish state, something the Palestinian leadership has vehemently refused to do.
Israelis see the Palestinian refusal to recognize Israel as a Jewish state as evidence that the Arabs intend to continue the struggle against Israel even after a supposedly "final status" deal is signed.
But the Palestinians have also been criticizing Israel for years over its refusal to base a peace deal on the pre-1967 lines, and so will have trouble brushing off that offer without appearing insincere in their commitment to peace.
On paper, Israel is not offering much more than it already has. Previous Israeli governments have offered the Palestinians nearly all of the territory up to the pre-1967 borders, with mutually accepted land swaps to accomodate large Jewish settlements.
But, Israel has always been careful to not officially accept the pre-1967 borders because that is not what the UN Resolution 242 originally intended, and because doing so would surrender the Jewish claim to Judea and Samaria. It is for precisely that reason that the Palestinians want Israel to publicly accept the pre-1967 lines, and Netanyahu could be setting Israel up for trouble by doing so.
There is concern that Netanyahu feels trapped and that he must make such an offer with the Palestinians threatening to unilaterally seek international recognition for a Palestinian state at the UN in September.
The UN General Assembly is certain to vote in favor of a Palestinian state, and though the decision would not be legally binding, it would create a very sticky situation for Israel. By making this new offer regardign the pre-1967 borders, Netanyahu and the Obama Administration hope to head off the Palestinian UN bid and convince Palestinian leader Mahmoud Abbas to drop it all together.
Israel has taken what it likes to see as "bold risks" for peace in the past, such as the 2005 Gaza withdrawal. But, like with Gaza, all have so far proved to be bad risks that only increased the pressure and demands on Israel.