Gamal Hamad stood shouting across the barbed wire fences and no man's land to his mother and two brothers living on the Israeli side of this divided border town as two Israeli soldiers watched from a nearby observation post.

"He wants his brother to come over and go to the university here," explained one of Hamad's friends.

After bellowing with cupped hands for some time, the Hamad family moved under the Israeli post where the two fences running on either side of the 30-yard-wide empty strip came closer together and it was easier to hear.

But this was too much for the nervous Israeli soldiers who, oblivious to the 30 western reporters watching the scene, proceeded to detain Adil, 22, and Kamal, 20, and push them up against the fence for a sharp interrogation. After a five-minute shouting match, with the two Hamad brothers talking fluent Hebrew, the Israeli soldiers let them go with a warning not to approach so close to the fence again.

So it goes--residents here say--day in and day out in this unhappy, run-down town on the Egyptian-Israeli border where hundreds of Palestinian families are living divided lives until Egypt and Israel agree on their fate.

A door in the border fence, called Salah Iddin Gate by the townspeople, opens each morning at 8 a.m. to allow about 50 Palestinian farmers, teachers and civil servants to cross from the Egyptian to the Israeli-controlled side of Rafah, where their plots of land or jobs are located. At 5 p.m., it opens again to allow them back.

But for most of the Palestinians, the main means of daily communication is bellowing across the fence, which cuts through the town's heart, to relatives on the other side.

Negotiations to avoid splitting the town, the main border crossing point between the two peace partners, failed on the eve of Israel's final evacuation of the Sinai one year ago. Egypt refused to adjust the border as Israel proposed, for fear of compromising its stand that the original line, drawn at the time of the British mandate over Palestine, should be strictly adhered to.

Any adjustment of the border in Rafah would undermine the Egyptian position in Taba, a disputed wedge of border land at the other end of their common border, on the Gulf of Aqaba, in the view of Egyptian Foreign Ministry officials.

A feud basically over the different costs of living and construction materials in the two countries has kept Egypt and Israel from reaching any agreement on the issue of reuniting families and resettling 5,000 Palestinian refugees from a camp outside Rafah to the Gaza Strip. And it has left another thorn to fester in the side of their antagonistic relationship.

An Egyptian Foreign Ministry official said two negotiating efforts over the last two months had failed to resolve the dispute because of "strange conditions" that Israel is putting forth before it will accept the 5,000 refugees. He said Israel wants the right to select who comes over and to decide how much each family will get in compensation from the Egyptian government.

An Israeli Embassy official in Cairo gave a different version.

The Egyptians, he said, "created the problem of a divided city and the refugees. We agreed to receive them on condition of proper compensation. We have allocated land and prepared it. Egypt has not decided how much compensation. We insist it has to be enough." He did not indicate how much "enough" might be.