ARABS-ISRAEL - July 3 - Israelis Reject Captors' Deadline.

Palestinian militants holding a soldier in the Gaza Strip gives Israel an ultimatum, stating that unless the release of 1,000 Palestinian prisoners begin this morning it will "bear the consequences". The Israeli government immediately rejected the ultimatum but some cracks appeared in the publicly stated refusal to negotiate over the release of the 19-year-old corporal. The office of the PM Ehud Olmert, issued a statement reiterating his position that "there will be no negotiations to release prisoners". But military sources speaking to Israeli media implied that talks were possible and that they had outlined a possible deal to the government. The army bars the release of any prisoners "with blood on their hands". As part of the deal, Hamas was to guarantee that no more attacks would be staged against Israel from Gaza, including the launching of Qassam homemade rockets. In return, Israel would cease its operations in Gaza. The captors did not specify that the corporal would be released if their demands were met. An opinion poll last week in the Israeli newspaper Yediot Aharonot showed a majority of Israelis willing to free Palestinian prisoners to save the life of the soldier. Olmert, who is seen as inexperienced in security matters, runs the risk of being blamed if harm comes to the soldier or else being branded weak if he gives in to the demands of militants. The army moved into the northern Gaza Strip on July 3 in what it called a limited operation targeting Palestinian tunnels and explosive devices in the area. Troops and armour had been massing for days on the border for what was billed as a large offensive but which was later put on hold. Israel moved into southern Gaza last week, three days after the soldier's kidnap. A spokesman for the Hamas-led Palestinian government, Ghazi Hamad, said that the ultimatum issued by the soldier's captors was aimed at stopping Israeli army action in Gaza. "If it continues every day to kill and target and attack, it won't get the soldier, alive or dead". But the feeling in Gaza was that it is not in the militants' interest to kill the captive. The corporal was seized on 25 June in an attack on an army position outside the Gaza border by three Palestinian groups, chief among them Hamas. Earlier Hamas had annulled an 18-month de facto ceasefire in response to civilian casualties in raids. The raid coincided with a crucial stage in political negotiations with the rival Fatah movement of Pres Mahmoud Abbas over a common policy on Israel and with pronounced decline in support for the movement since it won elections in January.