Egypt's President Mohamed Mursi

"Israel must recognise that we do not accept this aggression" ... Egypt's President Mohammed Mursi. Photo: Reuters

COURAGEOUS or foolhardy? Who - Israel or Hamas?

It's too early to say. But both sides in the latest eruption in Gaza are sorely testing Egypt's President Mohammed Mursi, effectively daring him to put his money where his mouth is.

Actually, it's Barack Obama's money - an annual $US1.5 billion ($1.4 billion) in direct aid from Washington and a loan for a further $US4.5 billion from the International Monetary Fund is also in play.

And now, Israel supporters on both sides of the US Congress are competing to see who can cobble together the toughest demand that Cairo get nothing if it even dares to think about a protest that goes beyond the legal and diplomatic framework of its peace treaty with Israel.

But for now Mursi is doing the splits. His rhetoric is strongly pro-Hamas, but his every action - recalling his ambassador in Tel Aviv, dispatching his prime minister to Gaza, working the phones to Washington and the capitals of Europe and the region - is within the language of the treaty.

For how long? Good question.

Arguably, a part of the strategic thinking in Israel and the Palestinians is to test Mursi. Israel needs to know if the man who branded Israelis ''vampires'' for killing Palestinians will honour the treaty, which is the quid pro quo behind the annual aid cheque from Washington.

Hamas wants to know what sort of muscle there is beneath the Mursi rhetoric - if all they get after the Arab Spring is more rhetoric, then so what?

Mursi is confronted by the demands of his people - not to mention arms of his own government - that he redresses the failure of his dictator predecessor Hosni Mubarak, who merely averted his gaze when Israel stormed into Gaza late in 2008 … and then popped to the bank to cash his US aid cheque.

Verbally Mursi has not held back. "The Egyptian people, the Egyptian leadership, Egyptian government and all of Egypt is standing with all its resources to stop this assault, to prevent the killing and bloodshed of the Palestinians," he said in an address to the nation. "Israel must recognise that we do not accept this aggression."

But if this crisis lasts more than a few days, mere rhetoric might not be enough. On one level, it's good that Mursi and almost all the Egyptian political groupings are on the same page on Palestine. But if all Mursi does is talk, he is likely to face calls for a tougher response.

A hint of what might be in store appeared in a joint statement by the Egyptian ministry for religious endowments and the Islamic Affairs Council, urging Palestinian ''resistance [to] Zionist depth [and] prove that they are tougher and stronger than [during Israel's 2008 assault]".

It urges Mursi to expel Israel's ambassador to Cairo and to "fulfil the promise he made to preachers and scholars that he won't allow Palestine to be hit or for the Palestinians to be killed''. Then the statement gets to the rhetoric-v-action nub of its argument, asking clerics to use Friday's holy day prayers "to direct the masses of the [Muslim] nation everywhere in the world to practical revenge, rather than verbal revenge, against the people of Zion".

Like Hamas, Mursi's Freedom and Justice Party's roots are in the Islamist Muslim Brotherhood, which was ruthlessly suppressed by Mubarak and his predecessors.

Mursi has tried to steer a middle course with Hamas, perhaps believing he might sidestep any need for unequivocal support for the Palestinian Islamists by encouraging Hamas to reconcile with the other key power bloc in the Occupied Territories, the secular Fatah movement headed by Mahmoud Abbas.

In a phone-call on Wednesday, Obama reportedly urged Mursi to stick to his reconciliation guns, asking Cairo not take any action that would damage its ''cold peace'' relations with Israel - or threaten the peace treaty.

"[The Americans] want to make sure it doesn't get to a point where the peace accords are under threat, and an escalation in Gaza could push it down that path," a Western diplomat in the region told the Guardian.

"The Americans recognise that there has to be a certain latitude for Mursi because he faces his own pressures to take a tougher stand with Israel.

"Washington is co-opting the Egyptians into making peace - not only to get Hamas to rein it in, but to stop the Egyptians themselves from taking it over the cliff."

Co-opting the Egyptians? That's the kind of language that will have Egyptian blood boiling.

Mursi has said publicly that his government will honour the treaty. But he has also laid out the case that Israel has failed to honour its treaty obligations.

In a September interview with The New York Times, in which he condemned the US for constantly taking the Israeli side against the Palestinians, he caused tremors in Washington by accusing the US of failing to have Israel comply with the terms of the 1978 Camp David agreement to withdraw from occupied Palestinian land.

"As long as peace and justice are not fulfilled for the Palestinians, then the treaty remains unfulfilled," the Egyptian president said.