A senior Hamas source told the London-based Arabic-language al-Hayat newspaper in an interview published Friday morning that the negotiations between Israel and the Palestinian organization on a prisoner exchange deal are facing three major obstacles: Israel's refusal to release 50 prisoners out of 450 demanded by Hamas, its insistence on deporting 130 prisoners, and its refusal to include Israeli Arabs in the deal.

According to the source, the German mediator has been visiting the Gaza Strip and Israel, relaying different offers to both sides in a bid to overcome the difficulties. One of the options raised, the source said, was to deport some of the 50 prisoners Israeli refuses to release abroad, deport others to the Gaza Strip and leave the rest in jail. According to the source, the talks are progressing but no one can predict their results.

Saudi newspaper al-Watan published a similar report, quoting sources monitoring the negotiations as saying that Hamas rejected the offer it received from Israel through the German mediator.

According to the Saudi report, the dispute revolves around Israel's refusal to release 15 prisoners, headed by former Tanzim leader in the West Bank Marwan Barghouti, Secretary-General of the Popular Resistance for the Liberation of Palestine Ahmed Saadat, and 10 leaders of Hamas' military wing, including Abdullah Barghouti and Ibrahim Hamed.

"This is a red line," one of the sources said. "There is no chance the deal will go through without their release."

According to the reports, Israel has also turned down some of the demands made by Hamas. A Hamas source told the London-based al-Quds al-Arabi newspaper that the German mediator informed the organization heads that Israel is adamant in its refusal to accept some of their demands.

"This response by Israel could complicate some of the issues related to the negotiations," he said.

According to the report, Hamas may delay the deal's completion following Israel's response, relayed by the mediator, that it refuses to release some of the prisoners on Hamas' list and to accept some of the special arrangements demanded by the Palestinian organization as part of the deal.

'Shalit hasn't been transffered to Egypt'

Arab media reported Thursday that kidnapped soldier Gilad Shalit had been transferred to Egypt. But Abu Mujahed, a spokesman for the Popular Resistance Committees, said that the reports were media "experimental balloons" spread by the Israelis in order to try to gain information on the Palestinian organizations' stands.

According to Abu Mujahed, the ball is in the Israeli court and the Israeli government could end the affair if it were to accept the demands made by the groups holding Shalit.

He said the reports that Shalit had been transferred to Cairo were false. "We haven't finalized the deal yet in a way that we could start implementing it," he said, calling on the media to be cautious in their reports, which damage the prisoners' morale.

Hamas' representative in Lebanon, Osama Hamdan, also denied a report in Kuwaiti newspaper al-Jarida that Shalit had been transferred to Cairo together with Hamas strongman Dr. Mahmoud al-Zahar and Ahmed Jabari, commander of the organization's military wing. Hamdan said the reports were groundless.

The High Court of Justice ruled this week that the details of the prisoner exchange deal would remain secret and that the judges would not intervene in the military censorship's considerations. They rejected a petition filed by bereaved parents, saying that they had been convinced that the prohibition on publishing the negotiations' details was the result of clear security considerations.

The al-Hayat newspaper also reported that Israel and Hamas had agreed on the names of 400 prisoners which would be released in the first stage of the deal, and that the dispute remained over the names of the other 50 prisoners.

A senior Hamas member told the paper that the main disagreement between the sides revolved around the release of Barghouti, Saadat and three female prisoners.