Israel, Hamas trade blame for stalled prisoner talks

JERUSALEM (Reuters) - Israel and Hamas on Tuesday left open the door to renew deadlocked talks on exchanging a captured Israeli soldier for hundreds of Palestinian prisoners, a condition set by the Jewish state for easing Gaza's blockade.

But Israeli cabinet ministers and officials played down the chances of a breakthrough deal with the Gaza Strip's Hamas Islamist rulers before Prime Minister Ehud Olmert hands over to right-winger Benjamin Netanyahu.

Netanyahu, who takes a harder line against Hamas, has an April 3 deadline to form a government following Israel's parliamentary election last month.

Olmert has made freedom for Gilad Shalit a precondition for a wider truce with Hamas and the opening of the coastal enclave's border crossings to reconstruction aid after Israel's military offensive earlier this year.

Israel accused Hamas of hardening its stance in the Egyptian-brokered negotiations, but officials have provided no examples. Hamas denies any change in its position.

In exchange for the soldier, seized by militants who tunneled into Israel from the Gaza Strip in 2006, Hamas has demanded the release of 1,400 Palestinian prisoners. They include about 450 long-term inmates.

"The prime minister was ready for far reaching concessions, way beyond what some of the ministers were ready for," Israeli Justice Minister Daniel Friedman said after a cabinet meeting. "At the same time, Hamas's demands reached such proportions that in our assessment, no Israeli government could accept."

Senior Hamas official Osama Hamdan urged Olmert to "listen to the voice of reason and come back to pursue the talks."

"If the Israeli government sticks to its negative position, it will not be possible to clinch a deal, at least at the present time," Hamdan said. "If Israel wants to reach a deal, it should come with a serious offer."

Israel has carried out lopsided exchanges in the past, trading large numbers of Arab prisoners for its captured soldiers or their remains.

An Israeli security source, suggesting the gap was narrowing, said on Monday that Israel was objecting to the release of fewer than 50 of the prisoners listed by Hamas.

Another dispute was over Israeli demands that some prisoners be exiled, a condition Hamas's armed wing has publicly rejected.

(Additional reporting by Nidal al-Mughrabi in Gaza and Adam Entous in Jerusalem; Writing by Adam Entous and Jeffrey Heller in Jerusalem, Editing by Dominic Evans)

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