Mike Hanna: A Saudi olive branch?

CNN's Mike Hanna

JERUSALEM (CNN) -- Amid ongoing violence in the Middle East, there's new hope for a possible breakthrough in the form of a reported Saudi Arabian peace proposal.

CNN's Carol Costello spoke Monday with CNN Correspondent Mike Hanna about the possible plan, along with the Israeli restrictions on Palestinian leader Yasser Arafat.

HANNA: Yasser Arafat, the Palestinian leader, remains confined to the West Bank city of Ramallah, and attempted moves in recent days to implement a cease-fire on the ground appear to be put on hold. The Israeli Cabinet decided Sunday that Arafat would remain in Ramallah; the restrictions of his movement would not be lifted.

Although in the course of [Monday] morning there has been a withdrawal of Israeli tanks around the compound in Ramallah to the outskirts of the city, Palestinians are outraged at the Israeli decision, saying that it is a humiliation of the Palestinian leader.

In protest against Israel's continued ban on Arafat's travel, the Palestinians abandoned a security meeting between Palestinian and Israeli leaders that was due to take place late [Sunday] night. So it's not quite clear where these ongoing security contacts are going to go at the moment. They are put on hold.

Violence continues on the ground. A pregnant woman traveling to a hospital in the West Bank city of Nablus was fired on by Israeli soldiers. The husband, who was in the car with her, was killed. Her father-in-law was injured. The woman and her baby survived the attack.

And earlier, another woman was shot when, say Israelis, she was attempting to run toward a checkpoint in the West Bank. And within the last few minutes, [there have been] reports of an Israeli shot and seriously injured in what police say is a drive-by shooting by Palestinian gunmen.

These ongoing incidents of violence [come amid] the background to potential change and new policy perhaps emerging -- reports of a new initiative by Saudi Arabia ... coming out of an interview with a New York Times journalist a couple of days ago, but no signs yet of any formal proposal made by the Saudis.

But Israel says that any attempts to get a solution to this ongoing crisis are to be welcomed, without going into any details about what its response would be to a widespread plan such as outlined by Saudi Arabia.

CNN: Has Saudi Arabia intervened before? Is this unusual, Mike?

HANNA: No, it is very unusual indeed, Carol. This is the first direct involvement by Saudi Arabia if, in fact, it is the case. What we have at the moment is various reports saying that Saudi Arabia has come up with this new plan.

Now, in terms of this plan, Saudi Arabia, according to the report, is [agreeing to] Arab recognition of Israel in exchange for Israel withdrawing to the pre-1967 boundaries. Now, this is a major development should it indeed be the case. For the first time, Saudi Arabia itself is proposing a recognition of Israel as a state. This has not been done before. So this plan, embryonic as it is at this stage, is potentially critical in terms of resolving the conflict in the region.

CNN: Why do you suppose Saudi Arabia has done this?

HANNA: There have been fears about the ongoing escalation within the region and fears too of a wider conflict that could emerge out of the conflict between Israelis and Palestinians. Now Saudi Arabia has kept its distance. It is theoretically still at a state of war with Israel [and] has refused to recognize the state of Israel.

However, there has been an awareness among some in the Arab world of the potential danger to the region as a whole, given the ongoing instability in the conflict between Israelis and Palestinians, and many are arguing that it is to the interests of the region to resolve this conflict.

And Saudi Arabia, too, is looking to its relationship with the United States, which it wants to keep on as warm a basis as possible. And its intervention in this conflict will certainly be very kindly viewed by the United States.