Egypt is working hard to secure the release of kidnapped soldier Gilad Shalit, but Israel has added "terms and conditions" that are impeding progress, Egyptian President Hosni Mubarak said in an interview over the weekend with the American television station PBS.

Mubarak, who referred to Shalit as "our prisoner," was interviewed by Charlie Rose in Cairo shortly before leaving for Washington, where he arrived yesterday for his first meeting with U.S. President Barack Obama.

Following are excerpts from the interview.

The main subject between you and President Obama will be peace in the Middle East, Israel and Palestine. Tell me where that is. Tell me what Egypt's role is. Your own General [Omar] Suleiman has met with Hamas, he's met with Fatah, he's met with Israel, are you making progress?

"We have a major role in this issue. We share boundaries with the Palestinians. We share boundaries with Gaza, Jordan shares boundaries with the West Bank. The stability of this part of the world means the stability of the Arab region. But failing to solve this issue [would] jeopardize the stability of even the globe itself. We are trying to solve the problem between Hamas and the authorities in the West Bank because this is quite an important ... Unless we reconcile their differences, there will not be stability there, there will not be stability even in Israel. Violence will recur."

Are you making any progress?

"Sure we have made progress. But it will keep going. You know, for instance, dealing with Hamas and the Palestinian Authority does take time. And what retards the process is some sort of external intervention. For instance, we were just about to facilitate the release of the prisoner, Shalit. You know that he's our prisoner."

Right, held by Hamas in Gaza.

"We were just about to secure his release in our custody and solve this problem, but external interventions, outside interventions hindered that. But we are working on that and in collaboration and cooperation with the Germans."

It is said that ... the Israelis made extra demand[s] and prevented you and Egypt from gaining control of the prisoner so that you could return him in exchange for Palestinians. That the problem was that you had a deal and Israel made additional demands. Is that true?

"You have a good deal of truth in what you said. We had agreed on the release of a number of the prisoners, but at one point in time, Israel added certain terms and conditions that impeded progress - that is, in addition to external interventions. So we are doing an effort, and the Germans are willing to join hands and we do welcome them in order to secure that. The deal or the agreement was to take care of Shalit and that Israel would release a number of prisoners, and when this is done we will hand over Shalit to the Israelis. We are still following this. Our intelligence organization is working on that, and we still have hope to conclude this on a good note."

Do you think it's likely to happen soon?

"I can't say that certainly, because dealing with others may take time. For instance, when we are doing our best to do some reconciliation between the Palestinians and Fatah, at the 11th hour you'll find a new difference, you'll find new terms and conditions. And we received Hamas delegations, we received the Palestinian authorities. The process is on, and we still have a great hope that we will conclude this successfully."

It is also being said that you wanted to bring together Hamas and others and that Syria prevented you from having a conference.

"I don't want to mention any country in particular by name, but I know that there are certain interventions by other countries. I cannot say that Syria is the one that impeded things. You know that. I know - you know, and I know that. It is clear. The contacts with Iran are clear, and there are constant contacts between them, Hezbollah in Lebanon, Hamas in Gaza."

Do you believe Iran plays a destabilizing role?

"Iran and the internal problems that they have in their country - they say there's some interference from other countries of world, from foreign countries, not from Iran, that pushed the Iranians to hold these demonstrations and the strikes and all these things. I support them ... [But] I say to Iran, 'if you complain of interventions from external forces in Iran, I would say to you, don't interfere with the home affairs of other Arab countries like Lebanon, like Hamas and others. Since you complain of this external or foreign interference, so don't do it with other countries.'"

Do you think Israel will allow Iran to have a nuclear weapon?

"Look, I met the prime minister of Israel. And before [Benjamin] Netanyahu, and [Ehud] Olmert before, and the minister of defense in Israel. And the president, Shimon Peres. All of them are against nuclear weapons in Iran. But our understanding is that the whole region should be free of all forms, all types of mass effective weapons. And nuclear or not nuclear, whether Iran or Israel. So this doesn't mean since that Israel has, Iran would come up with something and others also. This would be a problem."

Let me come back to Arab-Palestinian and Israeli-Palestinian. The Arab initiative is considered to be a bargaining position.

"The Arab initiative is very clear. If Israel solves the problem between them and the Palestinian[s], and two states are established, Israel with Palestine, two states, I think Arabs, we can have normal relations with Israel."

Settlements have to stop.

"I have another point of view. And instead of saying stopping more settlements - and we heard this many times, now for over 10 years, and [they] never come to a stop - what I can say is that we have to consider the whole issue holistically, to negotiate on the final resolution. They wanted to have some temporary or final solutions. I said, forget about temporary, because the people will think that this is the final step. My point of view is to see the final solution.

"The same happened with us, the same with it [Egypt's peace treaty with Israel]: So we have an agreement for final resolution, and they [Israel] left the Sinai ... If we can do this with the Palestinians, I think this would be a very good sign."

And what's necessary to do it? What has to happen to make the agreement to create a Palestinian state [so] that Israel feels secure, so that there will not be Hamas or someone else on the West Bank able to lob missiles into the Israeli international airport?

"How to come to this agreement, we are working on this resolution between Hamas and the Palestinian Authority. If we can come to a conclusion, especially if the external interference were to [stop], we can convince the Palestinian Authority to sit for negotiation with Israel ... without preconditions on both sides of the parties. And then all of us would assist on this. This is the optimal solution."