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Normalization with Arab countries cannot take place without a complete settlement freeze in the West Bank, the United Nations special coordinator for the Middle East peace process told Haaretz on Tuesday in an exclusive interview.

Robert Serry said that in response to a complete settlement freeze important Arab countries that do not have diplomatic relations with Israel could be expected to allow Israel to open interest sections and let El Al aircraft use their air space.

With regard to kidnapped soldier Gilad Shalit, Serry said negotiations for reconciliation in Gaza should bring about Shalit's release as part of a prisoner exchange and the opening of the crossings between Israel and the Gaza Strip and the Rafah crossing, while renewing the work of European observers. Serry said it was "intolerable" that the Red Cross had not been allowed to visit Shalit.

Serry spoke at length about the agreement being formulated between Hamas and Fatah in Egypt, noting that it included the establishment of a joint Hamas-Fatah committee to deal with issues of security, rehabilitation of the Gaza Strip and preparations for elections.

"I hope to see the beginning of a reconciliation process in July. The UN is ready to engage with any positive and agreed outcome of the unity process in Cairo," Serry said.

With regard to settlements, Serry said, "From a legal point of view there is no difference between settlements and outposts - the 4th Geneva convention sets out the international legal framework. We cannot change our position."

He also said there was no difference between a settlement within the large settlement blocs and outside them. He said recognition of the settlement blocs was a matter for negotiation between Israel and the Palestinians on permanent borders.

"The U.S. and the international community want Israel to commit to its Road Map obligations and patience is not endless. There must be a credible freeze - this is what the Quartet is asking for. This could lead to an early resumption of negotiations," Serry said.

Serry also said that if Hamas wanted to achieve results it had to be involved in the creation of a new reality and that he expected to see steps on Hamas' part. Serry also said there was de facto calm in Gaza and that Hamas was preventing attempts by extremists to renew the firing of Qassam rockets on Israel.

"The Quartet sees the situation in Gaza as unsustainable. In my own conversations with the government of Israel I think there is the growing realization that the current policies are not working," he said. "At the same time, for Israel there seem to be no good options and all the issues are interrelated. At the current time there is a 'mini-tahadiya' [cease-fire]. Hamas feels it is in their interest to observe a calm. The calm needs solidification to address the causes of instability in Gaza."