Israel warned the governing Palestinian faction Hamas that the "sky will fall on them" if they harm a captured soldier after a deadline passed yesterday for the Jewish state to accept a prisoner exchange.
While Israeli tanks and infantry massed along the Gaza Strip's northern border for a threatened ground incursion, Prime Minister Ehud Olmert said the campaign to free Corporal Gilad Shalit could turn into "a long war."
Three Palestinian factions, among them the Hamas armed wing, pulled out of negotiations with Egyptian mediators trying to end the standoff over Shalit, a Hamas political leader said.
Israel rejected a 6am ultimatum set by the factions, which demanded that the Jewish state free 1,000 prisoners.
Unless the demands were met, the factions said, "the enemy will bear full responsibility for future consequences."
Olmert said Israel would not negotiate with the militants, and the Maariv newspaper reported the government had given the army a green light to launch a deeper incursion into northern Gaza, though there was no indication when it might begin.
"This is a long war," Olmert said. "It requires lots of patience, sometimes endless restraint. We have to know when to clench our teeth and to deal a decisive blow."
Washington has been urging Olmert to show restraint and take steps to minimize civilian casualties.
Hamas accused Israel of trying to topple its three-month-old government, which the Jewish state and Western powers have pushed to the brink of financial collapse by cutting off aid.
The smallest of the three militant groups, the previously unknown Islamic Army, said there would be no further information released on 19-year-old Shalit, who was seized in a cross-border raid on June 25.
They sent conflicting signals about his fate.
"Whether he will be killed or not killed, we will not disclose any information ... Discussion is closed," said Islamic Army spokesman Abu al-Muthana.
But he later said: "We do not kill captives. Our Islam requires that we treat captives well and fairly." He declined to say whether Shalit was alive or dead.
Despite the tough public line, Israeli officials have privately said they would consider other options to get the soldier back. Israel has released prisoners before in lopsided exchanges for captured citizens or the dead bodies of soldiers killed in battle.
Egypt has been leading international mediation efforts to solve the crisis, including talking to Syria, whose president, Bashar Assad, is believed to hold influence over Hamas' Syria-based political head, Khaled Mashaal. Turkey, a key Muslim ally of Israel, also has sent an envoy to Syria.
"We are dealing with more than one Middle Eastern government to see if the release of our serviceman can be secured. The fundamental principle is that his release must be unconditional," said Mark Regev, spokesman for Israel's Foreign Ministry.
Abu Muthana said the Army of Islam has been approached by Muslim leaders asking it to give more time to find a peaceful resolution. He said the group was considering the request.
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