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The Quartet (EU, US, Russia, and UN) named former British Prime Minister Tony Blair as its envoy to the Middle East. His official task will be to promote Palestinian economic development and advise on building the institutions for a future Palestinian state. Some observers, including The Independent's longtime Middle East correspondent Robert Fisk, expressed concern that Blair's support of President Bush's "War on Terror" and Iraq War compromises his credibility in the region. The official announcement says that Mr. Blair will “spend significant time in the region working with the parties and others to help create viable and lasting government institutions representing all Palestinians, a robust economy, and a climate of law and order for the Palestinian people.” 

On 1 July, Israel sent the first $117 million installment of the approximately $600 million in tax dollars it has withheld since the Hamas electoral victory in early 2006. For many of the PA's 170,000 employees, it was the first complete salary they had received in 16 months. Prime Minister Salam Fayyad is working to keep funds from reaching Hamas members, and Hamas has reported from Gaza that 23,000 civil servants have not been paid because of their ties to the movement. 

A prisoner exchange was also announced by Israel, which will ensure the release of 250 Palestinians from Israeli jails. Prime Minister Olmert explained, “We want to make use of all means to strengthen moderate forces within the Palestinian Authority, and to encourage them to follow the path that we believe can create conditions for real talks," in line with Israel's efforts to support Abbas and Fayyad.

The Arab League announced on 8 July that it is sending envoys to Israel to discuss an Arab peace initiative and how to support the Palestinian president. Jordan's Foreign Minister, Abdul-Ilah al-Khatib and Egyptian counterpart Ahmed Aboul Gheit are to arrive in Jerusalem on 12 July for talks with the Israeli prime minister and other senior officials. The plan—which would trade full Arab recognition of Israel for an Israeli withdrawal from all lands captured in the 1967 war—was initially suggested by Saudi Arabia during the height of second Intifada in 2002 and rejected by Israel. Mark Regev, a spokesman for the Israeli foreign ministry, said the ministers “will be talking about how the Arab peace proposal can help energize the rapprochement between Israel and the Palestinians," adding, “This is the first time the Arab League is coming to Israel. From its inception the Arab League has been hostile to Israel. It will be the first time we'll be flying the Arab League flag.” 

United States Secretary of State Condoleezza Rice is scheduled to visit Jerusalem, Ramallah and Ghana between 16-20 July. An anonymous U.S. official told the New York Times on 6 July, "The secretary will visit Jerusalem and Ramallah for meetings with officials from the Israeli and the Palestinian Authority governments." This is the Secretary's first visit to the region in four months, and the first since the Hamas takeover of Gaza. 

The release of BBC journalist Alan Johnson on 4 July after being held prisoner for 114 days by the little-known group Army of Islam in the Gaza Strip was a victory for Hamas. Alan praised Hamas' efforts for his release, saying he was sure that, “If Hamas had not turned the heat on in a big way, I’d still be in that room.” EU and Israeli officials said that Hamas' role in Johnson's release did not warrant a change in their policy towards it, and Cristina Gallach, the spokeswoman for the Union’s foreign policy chief, Javier Solana, said, “It would be premature to expect an immediate impact on relations between the European Union and Hamas.”