Saif al-Islam Gaddafi offered to sign a peace treaty with Israel and negotiate captive soldier Gilad Schalit's release in exchange for reduced pressure from NATO and Europe on Libya, Deputy Minister for Galilee and Negev Development Ayoub Kara (Likud) told The Jerusalem Post on Sunday.

"Saif al-Islam and I have mutual acquaintances in Austria. Long before the whole mess in Libya, I asked them to talk to him about Gilad Schalit, because the Gaddafis are close with [Hamas leader Khaled] Mashaal," Kara said.

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"About a month ago, he remembered me and told his friends that he would tell Mashaal to release Schalit, sign a treaty with Israel, and even give a speech in Jerusalem like [former Egyptian president Anwar] Sadat," the Druze minister explained. "I said that I would be willing to talk to him to help Gilad, and Saif al-Islam thought this would get rid of European and NATO pressure on Libya."

Kara received another message shortly afterwards that a meeting was arranged for him, as well as a Jewish Israeli and Jewish Austrian politician David Lazar with Saif al-Islam Gaddafi in Libya. However, Kara was denied permission from Israeli authorities to travel to Libya, for security reasons.

"Lazar told me that Saif al-Islam said he would bring us Gilad," Kara said, "and he told me not to speak about the deal until it was authorized by [Libyan leader Muammar] Gaddafi."

"I said I would bring the deal to the government and let them decide what to do," he said, adding: "Since then, the situation in Libya has declined, and it's no longer relevant."

Kara explained that he had no qualms speaking with the Libyan leadership, as long as he was helping release Schalit, who has been in captivity since 2006.

"If I knew Gilad Schalit was going to be released, I would pay any price," Kara stated. "I don't care about the internal situation in Libya – I just want to bring Gilad Schalit home."

The deal was originally reported by the London-based Asharq Al-Awsat, in an article that quotes Kara extensively. The deputy minister insists that he was not their source.

"I don't know how the story got out," Kara said.

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