If someone were to offer Ehud Olmert the possibility of drawing a thick, black line through all of the events of the past year, presumably the prime minister would gladly accept it. It isn't just the war in Lebanon. It is also the affair of the abduction of Corporal Gilad Shalit two and a half weeks earlier, and the failed "Summer Rain" military operation in the Gaza Strip in the wake of the kidnapping, which did not bring Shalit back and did not yield any other significant accomplishments.

Here are two of the outstanding statements from that period that Olmert would no doubt prefer to forget: On June 26, one day after Shalit was abducted: "The question of the release of [Palestinian] prisoners [in return for Shalit] is not at all on the agenda of the government of Israel." On July 1, a statement from the Foreign Ministry on Olmert's behalf: "There will not be any deal. The soldier Shalit will be released, or else we will be compelled to act to release him." Behind the scenes Olmert's people were constantly briefing and reminding journalists: The aim is to break the old rules of the game. Israel will act so that the terror organizations, first in the territories and afterward in Lebanon, will lose the desire to abduct more people.

Since then more than eight months have elapsed. The appetite of the would-be abductors has perhaps been tempered - in light of the many losses among the Palestinians and the Lebanese - but the incentive is still there. Israel is now negotiating the release of thousands of prisoners in return for Shalit, Eldad Regev and Ehud Goldwasser, in two separate channels.

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The prime minister might well have pondered these things on Tuesday this week, at the gloomy meeting he convened with Defense Minister Amir Peretz and the heads of the intelligence community to discuss the list of demands that Hamas has submitted for a possible exchange for Shalit. The participants in the discussion defined the Hamas demands as disappointing and unacceptable, but the negotiations will continue.

Israel is now facing a two-fold problem. First, it has had to retreat from the arrogant declarations it made, to the effect that it would not negotiate at all. And now that it is prepared to discuss a deal, it turns out that the demands of Hamas are overblown. Ostensibly, Olmert could go back to the final part of the Foreign Ministry statement of July 1 - the release of the abducted soldier by force. Although it is possible and desirable to hope that the worrisome intelligence gap - from the time that the Shin Bet security service was unable to provide information as to Shalit's location - has been closed, at least in part, this in itself is not enough.

First of all, an aggressive action to free Shalit is liable to fail or alternatively to cost the lives of many fighters from the rescue force. Secondly, the intelligence has to be very specific: The general location of the captive is not enough. It suffices to recall the attempt to rescue Nachshon Wachsman in 1994, when a critical gap in information (the fact that the soldier was being held behind an iron door that was difficult to burst through) delayed the entry into the room and caused the failure of the entire operation.

However, Israel's disappointment with the demands of Hamas should not be seen as marking the end to making a deal. Previous arrangements for the release of prisoners also started with a high threshold of expectations on the part of the captors and culminated in more reasonable agreements. Even if Hamas is now demanding the release of Marwan Barghouti of Fatah and the secretary general of the Popular Front, Ahmed Saadat, it is not clear if it is truly interested in seeing them go free, and able to reintegrate into Palestinian politics. And even when the organization is demanding the release of its most "senior" murderers from the days of the second intifada, it is possible that in the end, Hamas will agree to make do with more veteran prisoners, on whose hands the blood is less fresh.

It appears that the Israeli government will find it difficult at this time to release a large number of the "big names" among the prisoners. Despite the public desire to see Shalit's return, it is doubtful that Israeli public opinion will greet the mass release of known murderers with enthusiasm. Olmert and Peretz know the statistics that are in the hands of the Shin Bet, according to which tens of percentages of those released in previous deals have gone back to engaging in terror. Even if this government's days are numbered, it will find it difficult to take the approach of "after us, the deluge." Therefore, a possible agreement will apparently revolve around a few of the better-known figures suggested for release, stemming from a certain Israeli willingness (at which Olmert has hinted in recent months) to allow flexibility in the criteria that prohibit letting prisoners go who "have Israeli blood on their hands."

Additional Israeli flexibility will be reflected in the key element that will determine the way the deal will be conducted: No longer will there be one Israeli in return for about 400 Arab prisoners, as was chalked up in some of the previous deals, but rather one in return for about 1,400. The government will try to blur this difference by means of splitting the deal into phases. It is possible that the first phase, in which several hundred prisoners will be released, will be depicted in Israel as a gesture to Palestinian Authority Chairman Mahmoud Abbas (Abu Mazen), not as part of the Shalit deal.

In the assessment of a senior security source who was asked on Wednesday about the state of the contacts with the Palestinians, in light of the optimism evinced in Gaza, "activity is being felt, but it is not yet certain that there has been progress." As of the end of this week, the chances that Shalit will be at home on Independence Day this year do not appear great.

Fed up in the prisons

The prisoners whose names are on the Hamas list, as published in the Palestinian media, have tried to send out a message of business as usual. It appears that they, too, are a bit fed up with the weekly ritual of optimistic reports on progress in the negotiations. According to some of these reports, the name of Hassan Yusuf, one of the heads of Hamas in the West Bank, appears at the top of the list. Yusuf, incarcerated in the Ofer Prison not far from his home in Ramallah, sounded to his interlocutors this week as if he is in a good mood. He could not tell them whether he is indeed slated to be released and what is really going on in the talks.

Yihyeh Sanwar, one of the founders of the military wing of Hamas, whose name is also on the list for possible release, has said that the negotiations must be conducted in secret and that the intensive reporting in the media is getting on the prisoners' nerves.

Even the call Wednesday by PA Minister for Prisoner Affairs Suleiman Abu Sneineh for all prisoners to go on a hunger strike has not elicited an enthusiastic response. Only the inmates at Hadarim Prison announced their intention to refuse dinner - perhaps because of the need for a "commander's example." Many of the prisoner leaders are at Hadarim: Ahmed Saadat, his deputy Abdul Rahim Malouh, Abdul Khaleq al-Natsheh from Hamas and others. The most famous prisoner at this prison, Marwan Barghouti, also appears to be calm, and has been heard saying that the prisoners are following the news, but that there is no unusual activity going on.

Outside, Barghouti's friends in Fatah are recalling, without fondness, their experiences as former prisoners. Kadoura Fares, a Fatah leader, says that the prisoners "got excited about every report, but were wary of false expectations. Veteran prisoners, especially, have a great deal of experience with deals that go nowhere. Some of the prisoners do not manage to sleep in a situation like this. I know, because I was there in the past."

Deputy Minister for Prisoner Affairs Ziyad Abu 'Ein, a Fatah man in whose home Barghouti was arrested in 2002, and who himself has served long prison terms, says that this sort of period is especially sensitive. "The prisoners are in a delicate situation, especially the veterans. Each of them is hoping that his name will appear on the list."

This week Hamas made sure to leak several versions of the list of prisoners whose release it is demanding. The resulting confusion sparked protests among the families of some of the prisoners. The uncertainty has been so great that some Palestinians have even contacted Israeli journalists to find out whether their relatives are on the list. Many Palestinians suspect that Hamas is trying to hide something.

"We have been contacted by hundreds of prisoners' families," relates Abu 'Ein, "but we have no idea what to say to them. It is also not clear who put together the list. Did Khaled Meshal, head of the [Hamas] political bureau, formulate the list in Damascus, or Prime Minister Ismail Haniyeh? Or was it in fact a band of armed men from the Popular Resistance Committees? We, in the PA Ministry of Prisoner Affairs, have no connection to the list."

"Hamas knows that Israel will not release all the senior people on the list," says a Palestinian source involved in the negotiations, "but the organization does not intend to concede on the release of senior people from the military wing entirely. They also know that they will not get all the 'engineers,' but they will not be content with the release of leaders who have only a year or two of imprisonment left. They are planning to insist on the release of prisoners who have been given many life sentences."

The insistence on the release of senior figures from the military wing of Hamas has aroused criticism in the territories. The fear is that Israeli rejection of the demands will engender a prolonged delay and during this time, the inmates whose status is considered most important among the Palestinian public - the veterans who were arrested even before the Oslo agreements - will continue to serve their terms.

"The prisoners have not been involved in the shaping of the list," relates a senior person in Fatah. "They sent a letter to the Hamas leadership in Damascus that stressed the most important criteria for release, in this order: veterans (whose number is estimated at 300), women, children, sick people and leaders. But Hamas, apparently, has priorities of its own."

Indeed it is the release of the veteran prisoners that could in the end enable Hamas and Israel to arrive at a compromise. On the one hand, this is not a matter of planners of suicide attacks who are responsible for the deaths of hundreds of people. On the other hand, the veterans are perceived in the Palestinian street as the most important prisoners. The question is to what extent both sides want the deal to be closed quickly.

Against the clock

In the minutes of cabinet and General Staff discussions during the Second Lebanon War, it is evident that a great deal of attention was paid to synchronizing clocks: diplomatic ones as opposed to military. The Israel Defense Forces was bothered by the question of whether it had enough time to act in the field, relative to the progress in contacts concerning a cease-fire - so bothered that, in the end, it barely managed to function. Olmert did repeatedly promise the generals that they had all the time in the world, but the war ended without the military plans being implemented. Surrounding the Shalit deal, the situation is almost the opposite. The main question is whether those who are conducting the negotiations will succeed in bringing them to fruition and securing the soldier's release before Gaza goes up in flames again. The key to the answer lies, to a large extent, in hands of the military wing of Hamas, which is, together with the Popular Resistance Committees, holding Shalit.

Israel's security establishment has identified the existence of three distinct streams in Hamas, since the Mecca agreement and the establishment of the Palestinian unity government. The first, under the leadership of Meshal (and, at this stage, with Haniyeh's support), accepts the Mecca agreement as part of a larger plan, whose aim is for Hamas to take over the PLO, its status and its assets.

The second, followers of the strict ideological stream under the leadership of former foreign minister Mahmoud al-Zahar, rejects the agreement and the government, and refuses to take any part in it.

The third stream, the military wing, whose most prominent activists are Ahmed Jabari and Ahmed Randor, also has reservations about the agreement and is translating its objections into deeds: Activists from that wing are continuing to attack Fatah people, with whom they have an open vendetta, due to months of civil strife in the Gaza Strip, and are also gradually renewing the attacks on Israel. The first evidence of this came in a number of attacks along the fence in Gaza, in which Hamas snipers fired on Israeli civilians and soldiers.

The most disturbing sign came this week, with the Shin Bet's statement concerning the discovery in Qalqilyah of a Hamas network, whose members tried to blow up a car laden with explosives in Tel Aviv during Passover. Only a small fraction of the story here is known. No one is explaining what motivates a terrorist who has already entered Tel Aviv with 100 kilograms of explosive charges to turn and go back to where he came from, and under what circumstances the "work accident," in which the car later blew up in Qalqilyah, occurred. However, in Hamas, too, they are confirming that there was indeed been an attempted attack that was thwarted.

No less important: In light of the military wing's weakness in the West Bank, it is presumed that some of the instructions for the planned attack came from Gaza. It is not hard to guess where the IDF would be had Hamas activists from Qalqilyah succeeded in carrying out again what their colleagues from Tul Karm did at the Park Hotel in Netanya on seder night five years ago. A mass terror attack in Tel Aviv would have greatly accelerated a wide-ranging military incursion into the Gaza Strip - despite Olmert's demonstrative opposition to such a move.

The conclusion: The coordinator of the contacts for the release of the prisoners, Ofer Dekel, is working against the clock. If the negotiations on the Shalit deal get stuck and, parallel to that, a large-scale terror attack occurs, a renewed conflagration in Gaza is liable to postpone the soldier's release for a long time.