Bloomberg News

Israel, Hamas Swap Prisoners in Deal That May Spur Talks

October 18, 2011

(Updates with comments from father starting in 11th paragraph, Mashaal in 19th.)

Oct. 18 (Bloomberg) -- Israeli soldier Gilad Shalit was freed after more than five years of captivity as Israel released hundreds of Palestinian prisoners, an exchange with Hamas that may help boost chances for peace talks.

Shalit crossed into Israel after being transferred from the Gaza Strip to Egyptian territory, the Israeli army said. Israel freed 477 Palestinians after receiving word that Shalit was in Egyptian hands. Another 550 Palestinian prisoners will be released later this year.

“I hope this deal will help the Israeli and Palestinian sides reach peace and strengthen cooperation,” Shalit, 25, said in an interview with Egyptian television before reaching Israel. Looking pale barely an hour after being freed by Hamas, Shalit also said: “I missed seeing people and talking to them.”

The release comes as the U.S. and European Union are pushing to revive talks that have been frozen for more than a year, a drive that became more urgent after Hamas’s rival, the Palestinian Authority, began pressing for statehood recognition at the United Nations. Middle East envoy Tony Blair has said the swap may facilitate efforts to restart negotiations by creating a better atmosphere.

“This agreement tears away the facade that says enemies can’t talk to each other,” said Yossi Mekelberg, an associate fellow at the Chatham House research institute in London. “With the right brokers, Israel and Hamas managed to work things out.”

Israeli Custody

In Gaza City, tens of thousands of Palestinians gathered at Al-Katiba field, swathed in green Hamas flags for a welcoming ceremony as the prisoners entered the territory in buses. Palestinian Authority President Mahmoud Abbas held a ceremony in the West Bank city of Ramallah to greet the former inmates, noting that thousands more are still in Israeli custody.

“We won’t relax until we see the last Palestinian prisoner coming out of Israeli jails,” Abbas said. He has refused to restart negotiations with Israel until Netanyahu halts settlement building.

One of the released prisoners, Yehiye Sinwar, called on Hamas’s military wing “to kidnap more soldiers to exchange them for the freedom of our loved ones who are still behind bars.” Sinwar, who was interviewed on Hamas’s Al-Aqsa TV, was one of the founders of Hamas’s Al Qassam Brigades and had been sentenced to life in prison for his role in the killing of two Israeli soldiers.

‘Mortal Danger’

Israeli Prime Minister Benjamin Netanyahu warned that released Palestinian prisoners who take part in attacks would place themselves “in mortal danger.”

Shalit’s father, Noam, told a crowd outside the family home that his son was suffering from shrapnel wounds that were never properly treated and that it was hard for him to face the welcoming masses after more than five years of isolation.

“We hope his rehabilitation will be quick and that he will be able to return to normal life,” Shalit said in remarks broadcast on Army Radio. “Today we can say that we have experienced a second birth of our son.”

An Israeli government official, speaking on condition of anonymity because of the sensitivity of the matter, criticized Egyptian television for its interview with Shalit, saying that questioning him before he had crossed to the Israeli side of the border was appalling.

Investor Confidence

The prisoner agreement comes amid increased investor confidence in the Israeli economy. Israeli five-year credit- default swaps, or the cost of protecting government debt against non-payment for the period, were at 157 at 7:01 p.m. after falling to a two month low of 150 yesterday, according to data provider CMA. The shekel weakened 0.4 percent in Tel Aviv to 3.6509 shekel to the dollar at 7:05 p.m.

“The shekel is weakening on the global trend, but to a lesser extent I think the Gilad Shalit issue is playing a part here,” said Shai Uliel, a dealer at Financial Immunities Ltd.

David Makovsky, head of the Middle East peace project at the Washington Institute for Near East Policy, said he didn’t share Blair’s optimism that the release would boost the peace process.

“Hamas is bound to see the move as a validation of its current path,” Makovsky said in an e-mail.

The agreement may undermine Abbas, who has been criticized by Israel and the U.S. for pursuing statehood recognition in the absence of a peace agreement. Some Israelis say the release of Palestinians convicted of attacks may lead to more bloodshed. Hamas has refused to repudiate violence or recognize Israel and is considered a terrorist organization by Israel, the U.S. and the EU.

Detention Orders

Of the Palestinians freed today, all except four had been convicted of crimes and sentenced, according to the Israel Prison Service. The others were under detention orders.

“This is a model for the unity of the people,” Hamas leader Khaled Mashaal said of the deal to reporters in Cairo. “The swap deal has created a good atmosphere that we will build on to speed up implementing the reconciliation.”

Abbas signed an agreement with Hamas in May aimed at healing a four-year breach between the two groups and uniting Gaza and the West Bank, which is controlled by the Palestinian Authority.

Shalit, who has both Israeli and French citizenship, was abducted June 25, 2006, after Palestinian militants fired a rocket-propelled grenade at the tank in which he was posted outside Gaza. Two other Israeli soldiers were killed in the cross-border raid.

--With assistance from Shoshanna Solomon in Tel Aviv, Saud Abu Ramadan in Gaza City, Fadwa Hodali in West Bank and Mariam Fam And Abdel Latif Wahba in Cairo. Editors: Louis Meixler, Andrew J. Barden, Heather Langan, Andrew Atkinson

To contact the reporters on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net; Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.


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