Israel and the Palestinians have reached an agreement to swap the Israeli soldier held hostage in Gaza with imprisoned Palestinians, Palestinian President Mahmoud Abbas was quoted saying today.
Bahrain's Akhbar al-Khaleejnewspaper quotes Mr Abbas saying Gilad Shalit would first be handed over to Egypt.
"An agreement has been reached about exchanging prisoners that is based on Egypt taking the soldier as a deposit, and after that the number of Palestinian prisoners-of-war would be announced," Mr Abbas said in the interview.
An Israeli security source said that Ofer Dekel, Mr Olmert's envoy on the hostage crisis, was recently in Cairo to confer with Egyptian officials acting as mediators with Cpl Shalit's captors. There was no immediate comment from Egypt.
Both sides however, said it was premature to say the exchange proposal was a done deal.
But Vice Prime Minister Shimon Peres later said a peace summit with Mr Abbas would be arranged if the deal went through.
"Abu Mazen [Mr Abbas] should be invited to talks, and I believe the prime minister will do so in the coming days. Negotiations must be launched on the basis of the 'road map'," Mr Peres told Israel's Army Radio, referring to the internationally-backed peace proposals.
Diplomacy between Israel and the Palestinians was deadlocked following Hamas's election victory in March after defeating Mr Abbas's more moderate Fatah movement in elections two months earlier.
Israel, backed by Western nations, wants Hamas to abandon its charter calling for the Jewish state's destruction and to renounce violence as a precondition for talks.
Mr Abbas argues that he could still be Israel's interlocutor, circumventing Hamas. An Abbas aide said the president had yet to receive an invitation to hold his first formal summit with Mr Olmert.
Palestinians estimate the number of prisoners at 10,000. Mr Olmert wants Cpl Shalit, whose captors include Hamas militants, to go free before discussing any such amnesty, an Israeli source said.
Complicating matters for Israel is its parallel efforts to retrieve two soldiers seized by Lebanon's Hizbollah guerrillas in a July 12th raid also aimed at forcing a prisoner release.
The gunmen abducted the soldier in a cross-border raid on June 25th. Israel then started a major offensive in Gaza to release him that has killed more than 200 Palestinians, about half of them civilians.
It is also alleged that the capture of Cpl Gillat inspired Hizbullah to do likewise on the Lebanese border, leading to a month-long conflict in which Lebanon was bombarded by Israel and thousands died.