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Egyptian-sponsored negotiations broke down last week

Uriel Sinai / AP Outgoing Israeli Prime Minister Ehud Olmert, right, convenes the weekly cabinet meeting in Jerusalem, Sunday, March 22.

By THE ASSOCIATED PRESS | JERUSALEM - Both Israel and Gaza's Hamas rulers said Sunday that talks aimed at freeing an Israeli soldier held nearly three years by Palestinian militants are not over, despite last week's public breakdown of Egyptian-mediated contacts.

Also, the exiled leader of Hamas said it's a "matter of time" before the Obama administration establishes contact with his group, according to an interview published Sunday.

Israeli Sgt. Gilad Schalit has been held by Hamas-linked militants in Gaza since June 2006, and Egypt hosted intensive talks last week aimed at a prisoner exchange.

When the talks ended, Olmert said Hamas demands were excessive and indicated he would turn the matter over to his successor, Benjamin Netanyahu, who is expected take office within two weeks.

Soldier's family urging attention to plight
At a ceremony marking Schalit's 1,000th day in captivity on Saturday, the soldier's father, Noam, implored Olmert to use his remaining time in office to pursue his son's release.

Olmert spokesman Mark Regev said the government was trying to reach a deal with Hamas.

"The government of Israel is committed to achieving the release of Gilad Schalit. The work is ongoing," he said. He provided no further details.

The head of Hamas' government in the Gaza Strip, Ismail Haniyeh, also indicated a deal was still possible in an article published Sunday in the Hamas newspaper Al-Ray.

Haniyeh blamed Israel for the breakdown in talks, but wrote, "Our people are still trying to renew the Egyptian-sponsored negotiations in order to reach a respectable prisoner exchange."

Exiled Hamas leader Khaled Mashaal was quoted by the Italian newspaper La Repubblica as saying that Olmert was trying to threaten Hamas with the specter of Netanyahu, who takes a harder line toward the Palestinians. "We know that he's putting on a little show," Mashaal said of Olmert. "But it makes no difference to us. He's the one who is in a hurry to bring home a success, without paying a price for it."

Israel agreed to release hundreds of prisoners
Israel agreed to release hundreds of Hamas prisoners but balked at releasing some of the masterminds of suicide bombings that killed dozens of Israeli civilians.

Also in the interview, Mashaal said President Barack Obama was using a "new language" toward the Mideast conflict, and it was only a "matter of time" before Washington opens contacts with Hamas, as it plans to do with the main Hamas sponsor, Iran.

The U.S., along with the EU and Israel, list Hamas as a terror organization. A Hamas spokesman praised Saturday's failed attempt to explode a huge car bomb in a mall parking lot in the Israeli port city of Haifa, an attack that police say could have killed hundreds.

Speaking before his Cabinet's weekly meeting Sunday, Olmert said preliminary information showed the Haifa car bomb was dispatched by "a serious terror infrastructure that worked in sophisticated ways to carry out a terror attack with mass casualties."