Ilan Grapel Tahrir
Ilan Grapel in Tahrir Square in a picture taken from his Facebook account.
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Ilan Grapel, the American-Israeli citizen detained in Egypt under suspicion of espionage for Israel, will be released next week following a visit from U.S. Secretary of Defense Leon Panetta to Cairo, the London-based Arab daily Al-Hayat reported Sunday.

The report quoted a senior Egyptian official, who said that Grapel is due to return to the United States with Panetta upon the completion of his visit next Tuesday.

The official added that Egypt understands that Grapel was not involved in serious espionage, and they are interested in profiting from the fruits of his release, which will be compensated with generous U.S. economic incentives.

The first reports that Egypt was considering releasing the alleged Israeli spy surfaced on Saturday, when Egypt's MENA news agency reported that the U.S. had offered Egypt political and economic incentives for Grapel's release.

MENA also reported that Grapel's parents, as well as a U.S. diplomat, were permitted to visit Grapel on Saturday.

Grapel, who holds dual U.S. and Israeli citizenship, was arrested in Cairo in June.
He was accused of sedition and inciting Egyptians to clash with the country's interim military leadership.

Israel has denied the 27-year-old Grapel was a spy.

Grapel's family says he was spending the summer in Cairo as an intern at a legal aid group. Grapel is a law student at Emory University in Georgia.

Grapel, whose father is Israeli, grew up in the U.S. After college, Grapel moved to Israel and joined the IDF, serving as a paratrooper. He was wounded during the Second Lebanon War in 2006.