The feeling this week was that Israel was an arm's length away from reaching out and returning Gilad Schalit. Unfortunately, this was not exactly the case. While the government is definitely closer than ever to reaching a deal with Hamas for a prisoner exchange in which Schalit would be released from his more-than-three-year captivity in Gaza, the implementation, according to latest assessments, could still be a week, if not weeks away. It could have been different. Earlier in the week, when the unnamed German mediator brought Israel Hamas's offer, reportedly with a list of names in hand that it could use to interchange with other prisoners slated to be released, the inner cabinet - also known as the forum of seven - began holding marathon talks to debate the proposal. There were three meetings on Sunday which ran into the middle of the night, another couple of meetings on Monday, following which the forum finally formulated a response that went something like, "Yes, but..." One of Israel's main reservations has to do with its refusal to allow some of the hard-core prisoners to return to the West Bank, instead demanding that they be deported to either the Gaza Strip or abroad. One Arab media report claimed several dozen would go to Qatar, and another few to Europe. On Wednesday, the German mediator brought the proposal, now coupled with Israel's reservations, back to the Gaza Strip. While he hoped to return after a few hours with a positive answer, Hamas leaders decided that they needed to first consult with Khaled Mashaal and some of their other Damascus-based leaders. Or in other words, Hamas wants to have the last word. The German mediator has now gone home for the long holiday weekend and is scheduled to return sometime next week, after Hamas formulates its response to Israel's reservations. While the pace of events has definitely slowed, the deal is still alive, and pending new Hamas demands, could be approved in the coming days. BASED ON some details of the proposal that have been published, Israel appears to be getting a better deal than the one debated by the government in Ehud Olmert's final days as prime minister more than a year ago. During Olmert's tenure, there was a point when Hamas was demanding 1,500 prisoners. Today, the number is much lower, and the release of the prisoners will reportedly not be immediate but in stages, maybe even months apart. In addition, Israel has reportedly succeeded in removing some of the big names from the list, such as Fatah leader Marwan Barghouti and Popular Front for the Liberation of Palestine leader Ahmed Sa'adat. This does not mean that the list does not include major terrorists; to the contrary, it may include prisoners such as Abdullah Barghouti, the engineer of the Sbarro bombing and numerous others attacks. According to assessments in the defense establishment, the catalyst for the change in the balance of the deal was Operation Cast Lead, launched a year ago this coming Sunday. Until Cast Lead, Hamas felt free to make exaggerated demands since it was not really interested in a deal, and its leaders believed they needed to to hold on to Schalit as insurance against an Israeli targeted killing. Cast Lead changed that mindset, as the Gaza-based Hamas leadership understood that it was no longer immune from attacks. The air force bombings that killed Hamas interior minister Said Siam and one of the terror group's senior clerics, Nizar Rayyan, got that point across well. In addition, the force of the operation and the devastation that ensued made it clear to Hamas that Schalit's presence in the Gaza Strip was not an obstacle for an Israeli military operation. Shortly after the operation ended, Hamas began talking seriously about a deal. While Israel's interest is in finalizing the deal, it has additional considerations, such as the concern over what the impact the mass release of prisoners, credited to Hamas, will have on Palestinian Authority President Mahmoud Abbas. Israel believes that Abbas's rule may be undermined by Hamas's victory in getting Jerusalem to release hundreds of prisoners, and that as a result he will be weakened even in the West Bank. That is one of the reasons it is refusing to allow prisoners to return to the West Bank, out of fear that they will reestablish the Hamas infrastructure there and begin challenging the PA. On the other hand, Hamas will likely not gain anything beside several hundred prisoners. While there had been some speculation that Israel would agree to lift the blockade of Gaza following Schalit's release, the blockade - excluding basic humanitarian supplies - would likely remain in place. This is made possible by a resolution that was passed in Olmert's cabinet in September 2007, which officially defined the Gaza Strip as a "hostile entity." While the significance of the decision was vague at the time, today it is clear, since legally it only obligates Israel to provide basic goods that will prevent a humanitarian crisis, but nothing more. In other words, even though Schalit will no longer be there, Israel will still have valid grounds to continue choking the Hamas regime. If this is Prime Minister Binyamin Netanyahu's decision, Hamas will find itself facing a blockade on two fronts - Israel and Egypt, which is continuing with the construction of an underground steel wall to cut off the terror group's smuggling tunnels. The barrier is reportedly going down to a depth of some 30 meters, and while it will not completely stop the smuggling industry, it will make it more difficult.