Israeli Prime Minister Benjamin Netanyahu has rejected Hamas’ proposals for a ceasefire and hostage deal in Gaza, calling the group’s demands “crazy” in a setback to diplomatic efforts to pause the war.

Netanyahu said during a Wednesday briefing: “We haven’t committed to anything. We haven’t committed to any of the crazy demands of Hamas, the numbers of terrorists with blood on their hands [to release].”

“There is not a commitment – there has to be a negotiation, it’s a process, and at the moment, from what I see from Hamas, it’s not happening,” Netanyahu added.

Hamas had presented its response to a proposal for a deal by calling for a phased Israeli withdrawal from the enclave during a four-and-a-half-month truce and a plan to permanently end the war, according to a copy of the group’s counteroffer obtained by CNN.

The Palestinian militant group that rules Gaza proposed a three-phase deal, each lasting 45 days, that would also see the gradual release of hostages held in the enclave in exchange for Palestinian prisoners in Israel – including those serving life sentences – as well as the start of a massive humanitarian and rebuilding effort.

Contrary to earlier demands, Hamas did not call for an immediate end to the war. Negotiations for a permanent ceasefire would take place during the truce and the remaining hostages would only be released once a final deal to end the war was agreed, the document said.

The proposal was a response to a framework agreement presented by negotiators in Paris at the end of last month. Senior Hamas official Muhammad Nazzal confirmed the text seen by CNN was genuine.

Hamas’ response put the focus back on Israel, which is under intense pressure from its allies to scale down the war and ease the humanitarian suffering in Gaza. There have been indications that the United States views the Hamas offer positively, but Netanyahu has pledged not to stop the campaign until Israel destroys Hamas once and for all.

An Israeli official familiar with the negotiations told CNN Wednesday there was “no way” his country would accept the Hamas counteroffer.

“Regarding the hostages deal, there is no way Israel will agree to a ceasefire and withdrawing the (Israeli) forces” from Gaza, the source said, asking not to be named discussing the talks. Among other factors, “Hamas are asking for (a) release of prisoners captured on October 7. This is something Israel will never agree to,” the source said.

The Israeli offensive, launched after the Hamas attack four months ago, has taken an immense humanitarian toll on the strip, with tens of thousands dead and the population of Gaza on the brink of famine.

A weeklong truce in November saw the release of 105 hostages in exchange for 240 Palestinian prisoners. Israel believes 132 hostages taken during the October 7 attacks remain in Gaza, 29 of whom are thought to have been killed.

A deal in three phrases

Under Hamas’ counterproposal, the first phase of the ceasefire would include the release of hostages in Gaza including women and children under 19 years old who aren’t enlisted in the Israeli military, as well as the elderly and the sick, in exchange for all Palestinian female, juvenile, sick and elderly Palestinian prisoners as well as 500 prisoners named by Hamas, including those with life sentences and convictions for serious crimes.

It would also include intensifying humanitarian aid, moving Israeli forces “outside populated areas,” a “temporary cessation” of military operations and aerial reconnaissance, the start of reconstruction work, and allowing the United Nations and its agencies to provide humanitarian services and establish housing camps.

It would also see the return of displaced Palestinians to their homes in all areas of the Strip and would ensure freedom of movement without obstruction.

In addition, this first phase would include starting indirect talks on “the requirements necessary for a complete ceasefire” and negotiations on the details for the second and third phases.

The second phase, Hamas has proposed, would see the conclusion of talks on a cessation of hostilities. During the second phase, all male hostages in Gaza (civilians and military personnel) would be released “in exchange for a specified number of Palestinian prisoners” and Israeli forces would have to completely exit the enclave.

Phase three would aim to exchange bodies and remains of those killed on both sides. It also stipulates that all crossings from the Gaza Strip be opened for trade to resume and so people can move without obstacles. Israel would commit to provide Gaza with its electricity and water needs.

Finally, Hamas proposes that the guarantors of the agreement would be Egypt, Qatar, Turkey, Russia and the United Nations. It does not include the US among the guarantors.

‘Positive’ proposal

Hamas’ counterproposal had been met with optimism by those involved in the negotiations. Sheikh Mohammed bin Abdulrahman Al Thani, the prime minister of Qatar, a key mediator, said Tuesday that Hamas’ response was “positive.”

“The reply includes some comments, but in general it is positive. However, given the sensitivity of the circumstances, we will not tackle details,” Al Thani said in the Qatari capital Doha after meeting US Secretary of State Antony Blinken. “We are optimistic, and we have delivered the response to the Israeli party.”

Qatar received the response from Hamas on Tuesday and then relayed it to Blinken when he arrived in the Qatari capital that day, a source familiar told CNN. Blinken had arrived in Doha after Tuesday meetings in Egypt – another key interlocutor – and meetings Monday in Saudi Arabia.

After being told about Hamas’ proposal, Blinken’s response was positive, the source said.

Blinken said on Tuesday that the US is reviewing the response from Hamas and that he would discuss it with Israeli government officials. On Wednesday, he spoke to Netanyahu in Tel Aviv in a closed-door meeting that lasted a little over an hour. He was expected to meet with Israel Defense Forces chief of staff Herzi Halevi as well as other key officials.

Blinken was expected to focus on pushing Israel toward a “humanitarian pause,” as the Biden administration calls it.

Israeli officials are discussing the counteroffer on Wednesday and will hold war cabinet and security cabinet meetings on Thursday, the Israeli official told CNN.

President Joe Biden, who was briefed on the Hamas response, described it as “a little over the top” in remarks to the press later on Tuesday, but did not provide further details.