JERUSALEM - Hamas appeared to hold out hope Tuesday for a last-minute prisoner swap with Israel, saying some progress had been made in talks despite Israel's claim that the militant group had hardened its position and backed away from previous understandings.
As the Israeli Cabinet prepared to discuss the outcome of two days of Egyptian-brokered talks at a special session Tuesday, Hamas official Moussa Abu Marzouk left the door open to a deal. The Islamic militant group, which controls Gaza, is seeking the release of hundreds of Palestinian prisoners in exchange for Sgt. Gilad Schalit, an Israeli soldier held in Gaza for nearly three years.
"There was some movement on this issue but not to the point of reaching an agreement," Abu Marzouk, Hamas' No. 2 official, told a Hamas Web site. "We are waiting for the Israeli Cabinet meeting to see whether they are going to approve the demand of the Palestinian factions that captured the Zionist soldier."
The Israel-Hamas talks in Cairo ended Monday without an agreement. Outgoing Israeli President Ehud Olmert said no deal had been reached, placing the blame squarely on Hamas' shoulders.
"During the negotiations, Hamas hardened its positions, retracted understandings reached during the last year and raised extreme demands, despite generous Israeli offers," Olmert said.
Olmert's statement came shortly after the two senior envoys returned from Cairo. The talks are mediated by Egypt because Israel and Hamas do not negotiate directly.
It was unclear whether Olmert, who is set to leave office in the coming days, would instruct his negotiators to make one last attempt to work out a deal with Hamas.
A continued impasse over Schalit could have far-reaching consequences for war-battered Gaza.
Israel has said it would not ease its crushing blockade of the territory, home to 1.4 million Palestinians, before Schalit returns home.
As long as the blockade is in place, Gaza cannot import the construction materials and equipment it desperately needs to rebuild after the Israeli offensive early this year.
A prisoner exchange accord might also shore up efforts to clinch a sustained truce between Israel and Hamas. Although Israel's three-week military campaign ended in an informal truce, Gaza militants continue to fire rockets at southern Israel, drawing Israeli airstrikes in retaliation.
Developments on these two fronts might give a boost to Palestinian reconciliation talks, which are vital to Gaza reconstruction and have been going on in Cairo for nearly two weeks without any reported breakthroughs.
World donors are ready to contribute billions of dollars to rebuild Gaza. But they won't funnel reconstruction funds through Hamas, which is branded by the West as a terrorist group.
Hamas overran Gaza in 2007 after trouncing forces loyal to Israel's peacemaking partner, Western-backed Palestinian President Mahmoud Abbas of Fatah.
The prisoners Hamas wants freed include dozens involved in deadly attacks on Israelis.
Israel did not agree to the entire list and wanted to bar some of the more notorious from returning to the West Bank for fear they would resume their militant activity, Israeli officials said.
Postings on Hamas Web sites differed over whether Israel had consented to free all the prisoners, but agreed that talks stalled over the proposed deportations.
"Hamas did not harden its positions because its demands were clear and consistent," said Osma Muzeni, a Hamas leader quoted on a Hamas Web site. "The Zionist enemy backtracked."
Winning the soldier's release would give Olmert a diplomatic victory in his final days as prime minister. Schalit, 22, was captured early in his administration and Olmert's inability to free him has dogged his tenure.
Olmert is to be replaced by Benjamin Netanyahu, who is putting together a hawkish government that might be less receptive to Hamas demands.
There is broad support among Israelis for a prisoner swap -- and precedents of similarly lopsided exchanges -- critics have warned that freed militants could go on a killing spree, as has happened in the past.
