UPDATE - There's a One Jerusalem conference call going on with Effie Eitam right now - post to come up shortly - and I asked him about rumors that Israel had accepted the truce. He is... highly skeptical. The fact that Israel has just dropped leaflets over the Gaza-Egypt border - signs of an impending operation to dismantle the smuggling tunnels one by one - lends something above an iota of credibility to his intuition.

ORIGINAL - Sarkozy says yes but fighting on the ground disagrees:

Clashes between Israel Defense Forces troops and Palestinian gunmen resumed in Gaza City on Wednesday afternoon, after the expiration of a three-hour truce to allow in humanitarian aid, residents said. Residents of the northern Gaza Strip had reported exchanges of fire between Israeli soldiers and Hamas militants during the 1 P.M. - 4 P.M. temporary truce period... Israeli ground forces battled with Palestinian gunmen throughout Gaza early Wednesday, as the army pressed on with its offensive against the coastal strip's Hamas rulers. The Israel Defense Forces used infantry, tanks, combat engineers, artillery, and intelligence units against the Palestinian militant group, on the twelfth day of Operation Cast Lead.

One of the x-factors is how much control Hamas's leadership has over facts on the ground. Their armed forces - filled with fanatics as it is - is not inclined to stop firing at Israeli civilians. Decision-making has already been devolved to commanders in the field - a guaranteed deterrence breakdown since it separates the forces doing the launching from the forces who are targeted in the retaliation. A truce now would put Israel in an analogous situation to Lebanon II and the worst years of Oslo: Israel is attacked and has to roll with it because there's no one to retaliate against. Better to use the next few weeks to firmly dismantle Hamas. Which is something the Israeli government knows. Which is why I'm highly skeptical that there will be a truce before, say, Friday. Although this kind of news is troubling:

Israel's security cabinet on Wednesday postponed a vote on whether to expand the Israel Defense Forces 12-day-old offensive in the Gaza Strip, political sources said. The sources said ministers discussed whether to implement the "third stage" of an operation launched on Dec. 27 but decided to defer the decision on whether to approve it to an undisclosed date. Israel's political leadership gathered in Tel Aviv on Wednesday morning to discuss widening the ground offensive in the Gaza Strip at a time when most of the aims of the operation have been met. In parallel, international diplomatic efforts are continuing, centering on an initiative to deploy an international force of combat engineers that would deal with the tunnels along the Philadelphi Route. The force would work in coordination with a naval force that would patrol the Gaza Strip shores.

In fairness: there are a lot of really smart people who think that an international force is the medium-term solution to radicalism in Hamas. But not for the next few weeks - not until there's a clear cut dismantling of Hamas.

References:
* Sarkozy: Israel and Palestinians agree to terms of Gaza truce [Ha'aretz]
* Clashes resume in Gaza City after 3-hour humanitarian truce [Ha'aretz]
* Defense sources: Even if Hamas agrees to truce, its armed wing may resist [Ha'aretz]
* Hamas: We Will Murder Jewish Children All Over The World (Plus: Diplomats Trying To Stop The IDF From Winning) [MR]
* Israel defers vote on expanding Gaza ground op amid growing truce bids [Ha'aretz]

Previously:
* Liberal Think Tanks, Majority Of Democratic Voters Condemn Israeli Self-Defense In Gaza
* Diplomatic Pressure Means The IDF Has Less Than A Week To Win
* Hamas Bombs Another Israeli School (Plus: What's Their Next "Surprise"?)