Gaza phase two stalled as Hamas disarmament dispute paralyses reconstruction, Canadian aid lines waiting

The U.S.-brokered Gaza ceasefire that brought home the last living Israeli hostages last autumn has stalled in its second phase, with the dispute over Hamas disarmament paralysing reconstruction and freezing the partial Israeli withdrawal that was supposed to follow phase one. The diplomat overseeing the deal acknowledged this week that the truce remains intact but that progress on the substantive elements of phase two has been blocked, leaving Gaza's two million displaced residents in extended limbo.

The body of the last Israeli hostage in Gaza was retrieved shortly before mid-May, completing the central humanitarian element of phase one. The ceasefire continues to hold formally, with the delivery of aid into Gaza continuing through the established routes. But the political process that was supposed to begin once all hostages had been returned has not yet started in earnest, with the question of Hamas's weapons stockpiles standing in the way.

For Canada, the stalled situation has practical and political implications. Canadian humanitarian organisations have been operating in Gaza throughout the conflict and remain among the most active international NGOs on the ground. The Canadian government, which has committed hundreds of millions of dollars to UN agencies and to non-governmental partners working in Gaza, has been pressing Israeli and U.S. counterparts to unlock phase two. Foreign Affairs Minister Anita Anand confirmed in a statement Thursday that Canada continues to support implementation of the full ceasefire framework.

The disarmament dispute

The phase one framework, brokered by the Trump administration in late 2025 with significant Egyptian and Qatari mediation, included the return of all Israeli hostages, the release of Palestinian prisoners, increased humanitarian aid, and a partial Israeli withdrawal from agreed positions inside Gaza. Phase two was intended to address Hamas's organisational and military future, the establishment of a new Palestinian governance arrangement, reconstruction financing, and the full Israeli withdrawal.

The U.S. and Israeli position has been that Hamas's complete disarmament is a non-negotiable prerequisite for phase two. The U.S. ceasefire envoy Nickolay Mladenov has repeatedly described disarmament as the foundational element without which other commitments cannot move forward. Israeli officials have been similarly unyielding, with senior figures in the Netanyahu government arguing that any phase two implementation that leaves Hamas's military structure intact would be unacceptable.

Hamas's position has been that it will not discuss phase two unless Israel first fully implements the terms of phase one. Specifically, Hamas has cited the partial Israeli withdrawal that was supposed to follow the hostage releases and the increased humanitarian aid commitments that the organisation says have been only partially fulfilled. The result has been a stand-off in which each side accuses the other of failing to deliver on commitments and each side conditions further progress on the other side moving first.

What reconstruction looks like on paper

The Trump administration's 20-point Comprehensive Plan, which forms the framework for the ceasefire, includes a sophisticated reconstruction architecture that has been under development by U.S., Egyptian, and Gulf state planners for more than a year. The plan envisions a multi-stage rebuilding effort with significant private capital participation, a managed transition of Gaza's civilian administration to a technocratic Palestinian authority, and international security guarantees.

The reconstruction estimates have been climbing as more detailed damage assessments have been completed. The latest UN-led assessment puts the total reconstruction cost at roughly 65 billion U.S. dollars over an estimated 10 to 15 year horizon. The Gulf states, the European Union, and the United States are the lead financing parties, with several Arab states pledging substantial contributions tied to the implementation of phase two and to acceptable governance arrangements.

Canada has committed to a series of more targeted contributions, including significant funding for UNRWA's operations across the region and for Canadian NGO partners working on water, sanitation, and primary health care in Gaza. The federal government has not yet committed to a reconstruction financing package because phase two has not begun, but officials have signalled that a Canadian contribution will be part of any broader donor mobilisation.

Aid delivery on the ground

The humanitarian aid channels into Gaza, which were significantly expanded under phase one, continue to operate. The number of trucks crossing into Gaza per day has increased dramatically from the wartime nadir, though it remains below pre-war norms and well below the assessed need. Aid distribution inside Gaza is being managed by a coalition of UN agencies, the International Committee of the Red Cross, and a network of Palestinian and international NGOs.

Canadian aid organisations have been continuously operating in Gaza since the start of the conflict. The Canadian Red Cross, Doctors Without Borders Canada, Islamic Relief Canada, and several other major organisations have personnel on the ground or running logistics through the Egyptian and Jordanian corridors. The operating environment remains extremely challenging, with damaged infrastructure, sporadic violence, and unresolved questions about the legal status of various reconstruction activities all complicating implementation.

The conditions inside Gaza are described in successive UN reports as catastrophic in humanitarian terms. Roughly 70 per cent of Gaza's housing stock has been destroyed or rendered uninhabitable. Water and sewage systems are operating at a fraction of capacity. Public health indicators have been deteriorating despite the expanded aid flows. The reconstruction effort that phase two was supposed to launch is, by every measure, urgent.

The West Bank picture

The Gaza file is unfolding against a backdrop of continuing tensions in the occupied West Bank, including expansion of Israeli settlement activity, periodic Israeli military operations in Palestinian cities, and ongoing settler violence in rural areas. The UN Security Council debated the West Bank situation this week, with the deputy special coordinator briefing council members on the escalating violence and on what she described as a worrying expansion of settlement activity.

The Canadian position on settlement activity remains that the settlements are inconsistent with international law and that their expansion is an obstacle to a viable two-state outcome. Foreign Affairs Minister Anand has reiterated this position in recent statements and has been pressing Canadian counterparts in the Quint, the informal grouping of major Western powers, to take a more co-ordinated position on the West Bank file.

The Palestinian Authority continues to operate but faces severe financial pressures, with Israeli withholding of tax revenues and reduced international assistance combining to push the authority toward insolvency. The political environment within the Palestinian Authority is increasingly strained, with the future of President Mahmoud Abbas's leadership and the broader institutional architecture of Palestinian governance unresolved.

The Israeli political picture

The Netanyahu government continues to face significant domestic pressure on the Gaza file. The completion of the hostage returns has removed the most immediate domestic political driver of the ceasefire, but the longer-term political environment remains tense. The prime minister's coalition includes parties to his right that have been pushing for an end to the ceasefire and a return to military operations in Gaza, alongside parties that have been pushing for full implementation of phase two and for renewed political dialogue.

Public opinion polling in Israel shows continued support for the ceasefire framework but significant scepticism about Hamas's commitment to disarmament. The hostage families, who were a major political force through phase one, have largely withdrawn from public advocacy now that the returns are complete, removing one of the most consistent voices for ceasefire implementation.

The Israeli security establishment is reported to favour phase two implementation provided the disarmament question can be credibly addressed. The military leadership has consistently argued through the conflict that a return to large-scale combat operations in Gaza would be costly without producing a durable strategic result. The political question is whether the prime minister can manage his coalition to implementation rather than to renewed military operations.

The diaspora reaction

The Canadian Jewish community has welcomed the completion of the hostage returns and the continued operation of the ceasefire but remains divided on the prospects for phase two. Major community organisations have urged the federal government to support the U.S. position on disarmament and to maintain economic and diplomatic pressure on Hamas. Other community voices have urged a more visible Canadian role in promoting a viable Palestinian state alongside Israel.

The Canadian Palestinian community has been advocating for stronger Canadian pressure on Israel to implement the partial withdrawal and humanitarian commitments of phase one. Community organisations have pressed the federal government to commit specific reconstruction financing now, rather than waiting for phase two formally to begin. The Canadian Arab Federation has been particularly active on the file, working with parliamentary allies across party lines.

Foreign Affairs Minister Anand has been meeting with both communities through the spring. The minister has emphasised the consistency of Canadian policy across the file, which has supported Israel's right to security while pressing for the protection of Palestinian civilians, support for two-state outcomes, and full implementation of the ceasefire framework.

What's next

The U.S. administration is reportedly considering a new push to start phase two even before the disarmament question is fully resolved. Sources cited in regional reporting suggest the administration may propose a sequenced implementation in which initial phase two elements, including aspects of the partial Israeli withdrawal and the reconstruction financing, begin while disarmament negotiations continue. The proposal has not yet been formally tabled and would require both Israeli and Hamas acceptance.

The next round of formal talks in Doha, scheduled for next week, will provide the first test of whether the U.S. proposal can produce movement. Egyptian and Qatari mediators are expected to play a central role, as they have through phase one. Israeli negotiators are reportedly preparing to engage with the proposal but have not committed to its core sequencing.

For Canadian observers, the file remains a balance of urgent humanitarian need, complex political constraints, and a slow international diplomatic process that has produced significant achievements but that has not yet delivered on the longer-term promise of phase two. The Canadian Wire will continue to follow the negotiations and the situation on the ground.