This article was originally published by Haaretz and is republished with permission.

Prime Minister Ehud Olmert on Monday ruled out any negotiations with Hamas over the release of an Israel Defense Forces soldier kidnapped a day earlier, and declared the Gaza Strip sealed off by land and sea.

Palestinian militant groups that claimed responsibility for Sunday's attack on an IDF post near Gaza said earlier Monday that they would provide information on the soldier kidnapped in the raid in return for certain demands.

"This is not a matter of negotiations, this is not a matter of bargaining," Olmert said in a speech to a Jewish Agency gathering in Jerusalem.

The prime minister said Israel would fight Islamic extremists and warned that it could hit militants wherever they are.

He said Israel had withdrawn "completely" from Gaza last year, and "anyone who fires from the other side of the border, anyone who caries out any attack against Israeli citizens, does so from a fanatical desire to destroy the Jewish state."

"By my order and that of the defense minister, the Gaza Strip is closed by sea and by land," he said.

Sunday's attack was claimed by the Hamas military wing, the Popular Resistance Committees and a hitherto unknown group calling itself the Army of Islam.

Corporal Gilad Shalit was abducted in the pre-dawn attack on his tank, in which two of the members of his four-strong crew were killed and the third seriously wounded.

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A pamphlet sent to local Gaza media outlets Monday and signed by the three groups said that they would only release information on the fate of Shalit if Israel freed Palestinian women and under-18s held in its jails.

According to recent figures, Israel currently has 95 Palestinian women and 313 under-18s in its prisons.

"Military Statement 1" from the three groups was issued after Prime Minister Ehud Olmert put the IDF on standby for a major offensive into Gaza.

"The Occupation [Israel] will not get any information about its missing soldier unless it abides by the following: release all female prisoners in Israeli jails... and children under the age of 18," the statement said.

A spokesman for Iz a-Din al-Qassam, Hamas' military wing, said, however, the statement did not mean it and the other two groups were holding Shalit.

Responding to the demands, Israel reiterated its position that it would not negotiate with militants over the return of the soldier.

"We are dealing with bringing Gilad home. We have no
intention of negotiating with Hamas on a prisoner exchange," Justice Minister Haim Ramon said after the release of the pamphlet Monday.

A senior military intelligence officer said earlier Monday that Shalit is being held in the Gaza Strip by senior members of Hamas' armed wing.

The officer told the Knesset Foreign Affairs and Defense Committee that Israel does not know exactly where the corporal is being held but, "we understand that the soldier is alive and lightly wounded."

Prime Minister Ehud Olmert said Shalit is in the hands of a group of Hamas members Israel has not identified. He emphasized that "the government sees the Palestinian Authority as responsible for the life of the kidnapped soldier."

The intelligence officer said, "at the moment there are differences between Hamas' military wing and Palestinian Prime Minister Ismail Haniyeh [of Hamas] over how to confront the Shalit matter. Haniyeh is seeking to solve the problem together with Abu Mazen [PA Chairman Mahmoud Abbas] as quickly as possible."

Hamas leader Khaled Meshal, the Damascus-based head of Hamas' political bureau, is also involved in the process.

According to the intelligence officer, the terrorists' original plan was to kidnap an IDF soldier, present him at a press conference and use him as a bargaining chip in demanding the release of Palestinian prisoners held in Israel. However, once the gunmen abducted Shalit, "they realized they were holding a hot potato."

Conflicting reports earlier on Monday indicated the Popular Resistance Committees may be holding kidnapped Israel Defense Forces soldier Corporal Gilad Shalit. One statement released by the militant group said he was in good condition, Agence France-Presse reported.

However, a spokesman for the group subsequently issued a statement denying the AFP report and saying he had no information about the abducted soldier.

Gaza-based diplomats involved in intensive mediation efforts to secure Shalit's release told Haaretz that he is in good condition.

The diplomats said they knew both where the soldier was being held and the organizational affiliation of those holding him, but refused to relay the information to Haaretz.

"Gilad's kidnappers have promised they are giving him good treatment. He is wounded, but he is in good health," the diplomats said on Sunday, adding they had succeeded in locating the group holding the kidnapped soldier and that they "hope he will be released as quickly as possible."

The sources did say that they are in contact with the heads of Hamas' military wing, Ahmed al-Ja'abri and Ahmed Randor, in attempts to convince them to release Shalit. The Hamas military wing shared responsibility for the attack with the Popular Resistance Committees and a largely unknown group called the Army of Islam.

IDF prepares to free Shalit

(Haaretz)

In a special session Sunday night, the political-security cabinet unanimously agreed that the IDF is to begin preparing for military steps aimed at securing Shalit's release, who Israel believes to be wounded but not in life-threatening condition.

A large IDF force of infantry backed by tanks continued to ring Gaza on Monday.

The two slain soldiers were named as First Lieutenant Hanan Barak, 21, lain to rest in his home town of Arad on Sunday evening , and Staff Sergeant Pavel Slutsker, 20, of Dimona, who was buried on Monday.

Intensive mediation

Egyptian intelligence officials on Sunday held contacts Meshal, who Abbas and other senior Fatah officials view as responsible for the attack.

Hamas' deputy premier, Nasser al Shaer, called on Shalit's kidnappers to release him immediately. PA government spokesman Razi Hamed, a Hamas official, voiced hope on Sunday that the kidnapping could be brought to a peaceful end.

"We are holding contacts with many officials, with the Egyptians, with all the Palestinian elements," he told Army Radio, speaking in Hebrew.

"We are continuing to deal with this matter, and I hope that we will reach a solution that will be good for us all."

Israel has placed responsibility for the attack on the Hamas-led Palestinian Authority, and has hinted that Hamas officials may be targeted. IDF Chief of Staff Dan Halutz said Sunday that Hamas was tied "from head to foot" to the deadly attack on the post, and Prime Minister Ehud Olmert said Israel holds the PA responsible "with all that implies."

In talks with Hamas' leaders based both in the territories and in Damascus, Abbas expressed his extreme displeasure at the operation, which is unlikely to have been executed without the approval of the Islamic movement's higher echelon based abroad.

Olmert: Era of restraint has come to an end

During the Sunday night cabinet meeting, ministers Shimon Peres, Eli Yishai and Meir Sheetrit urged the IDF to respond with restraint to the attack. However, Olmert responded, "The age of restraint has come to an end... We will respond forcefully, with an operation that will last more than a day or two."

On Monday it appeared that a ground operation was on hold, pending the outcome of an intensive international diplomatic effort to secure Shalit's safe release.

The cabinet ministers authorized Olmert and Defense Minister Amir Peretz to determine when a military operation would be launched.

Olmert said that Israel's current focus is on Shalit, and preventing militants from taking him out of the Gaza Strip. The prime minister also said that Israel would not release Palestinian prisoners in exchange for Shalit's freedom, as Israel has done in the past to secure the releases of kidnapped soldiers.

The IDF's Head of Personnel Directorate, Major General Elazar Stern, told the Shalit family that the soldier was kidnapped "on his feet," and is known to be capable of walking.

Arab diplomatic sources involved in efforts to bring about the soldier's release report that Shalit is in good health, information which contradicts an earlier radio broadcast from Gaza. A radio announcement claimed to be made by a Popular Resistance Committees spokesman said that the abducted soldier sustained stomach wounds, but his condition was stable.

Livni asks Annan, Rice to press Abbas

Foreign Minister Tzipi Livni spoke with United Nations Secretary General Kofi Annan and American Secretary of State Condoleezza Rice to ask they urge Abbas to secure Shalit's release. She also relayed the message that Israel considers the abduction a test to Abbas' leadership, and expects him to stay in Gaza to help resolve the crisis.

Livni also spoke with her European Union and Spanish counterparts, and was set to speak with foreign ministers from Great Britain, France, Russia and others.

Shortly after the early morning attack, IDF tanks and troops entered Gaza near the site of the incident as part of a manhunt for the missing soldier.

The PA closed the Gaza-Egypt border, and residents of the Israeli communities of Kerem Shalom, Yuval, Avshalom and Yated, which are located close to the site of the attack, were asked to remain inside their homes. Gunfire could still be heard Sunday afternoon.

Later in the day, IDF and the Shin Bet security service undertook a series of measures in an effort to locate the abducted soldier through intelligence means. In addition, the IDF placed its special forces on alert, and the division dealing with captured and missing soldiers also became involved.

"They [the militants] divided into three cells. One attacked an armored personnel carrier. The APC was empty. Another group attacked a tank with grenades... causing two deaths and one serious injury. Another two attacked another position with gunfire," an IDF spokesman said.

Shalit was the first to be seized by Palestinians since 1994 when Cpl. Nachson Waxman, a 19-year-old Israeli-American, was abducted. At the time, Israeli commandos stormed the safe house where Waxman was held, but he died in the raid along with three of his kidnappers.

Armed groups historically have used captured IDF soldiers, dead or alive, as a bargaining chip for the release of Palestinian prisoners held by Israel.

Following the attack, the IDF advised Palestinian security units to evacuate the Philadelphi Route along Gaza's southern border with Egypt in the Rafah area, saying Israeli military units were to enter.

Armed groups said the operation was in response to the Israeli assassination this month of PRC leader Jamal Abu Samhadana and Israeli air strikes aimed at militants firing homemade Qassam rockets from Gaza.

Israeli air strikes in response to daily Qassam rocket attacks on Sderot and other areas of the western Negev have killed 20 Palestinians in the past two weeks, 14 of them civilians.

Hamas ended a 16-month-old truce with Israel on June 9 after seven members of the same Palestinian family were killed on a Gaza beach during a day of heavy Israeli shelling. Hamas has blamed Israel for those deaths. Israel has denied all responsibility and has ruled out shelling as the cause of the deaths.

The IDF closed the Kerem Shalom crossing between Israel and Gaza for several days last week due to a security alert. The closure of the passage meant that the Rafah border crossing between Gaza and Egypt was also shut, as the European monitors who used Kerem Shalom to access Rafah could not reach the border.

On Saturday, Abbas' Fatah party came to an agreement with Hamas officials that "resistance" operations would be limited to territories occupied by Israel since the 1967 Six-Day War.