Israel knows where he is, but the cost of a rescue operation is believed to be too high. At the same time, releasing 1000 terrorists is costly too. Moreover, Israel needs to rebuild its deterrence power. Most likely, the operation will not save Shalit's life and there will be casualties among the Israeli special forces units. But at this time I believe that it is worth the risk. At least the operation will eliminate one of Hamas units.
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U.S. says it killed 10 AQAP Islamist militants in four air strikes in Yemen since April 23 (Reuters)
from the article: Army of Islam says Shalit now solely under control of Hamas