Palestinian President, Mahmoud Abbas, said on Tuesday that progress has
been made in the issue of a prisoner swap deal for the release of the
captured Israeli soldier, Gilad Shalit. The statements of Abbas came
during an interview with the Bahrain-based Bahrain-based Akhbar Al
Khalij newspaper. Meanwhile, the London-based Al Hayat newspaper
reported that Shalit may have been taken to Egypt.

Abbas told Akhbar Al Khalij that a possible arrangement is that Egypt would take Shalit as a “deposit” until the release of Palestinian detainees imprisoned by Israel. 

Corporal Gilad Shalit was abducted on June 25 after Palestinian fighters attacked an Israeli military post near the Gaza Strip; two soldiers and two fighters were killed in the attack.

Al Hayat newspaper reported that Shalit might already be in Egypt and will be held in Cairo for a period of time until a swap deal is reached.
The newspaper added that Egypt has proposed a three-phase prisoner swap deal; first, Shalit would be transferred to Egypt and Israel released 300 Palestinian detainees, second, Shalit would be transferred to Israel and additional 300 Palestinian detainees would be released, third, 200 detainees would be released by the end of the year.

Yet, it remains unclear that if this three-phase deal was true, why Israel did not free the first group of detainees.

Meanwhile, the Israeli Prime Minister, Ehud Olmert, said on Monday that Shalit must be returned to Israel before any Palestinian detainee is released.

Olmert told the Knesset Foreign  Affairs and Defense Committee that he will not be involved in any swap deal, before Shalit is freed.

Israeli online daily, Haaretz, reported that Olmert was personally monitoring the government's efforts to release of the three soldiers captured by the Palestinian resistance in Gaza and Hezbollah fighters in Lebanon.

Olmert added that the demand to release all captured soldiers is part of the United Nations resolution 1701 which was aimed at ending the recent war in Lebanon.

On Monday, Hezbollah officials told the German intelligence chief, Ernst Uhrlau, that Israel must lift the blockade it imposed on Lebanon, and evacuate its troops before holding any talks regarding the exchange of the abducted soldiers with Lebanese detainees.