The chances of reaching a cease-fire with Hamas in the Gaza Strip have significantly dropped, defense officials said Monday, due to seemingly irreconcilable differences - Israel's demand to link IDF soldier Gilad Schalit to the deal and Hamas's insistence that Israel immediately open the crossings into Gaza. At the same time, diplomatic officials said that Israel continues to let Egypt exhaust its efforts, partly because it understands the importance Cairo has placed on the issue and Jerusalem's interest in showing the Egyptians that Israel is not responsible for the failure of a cease-fire. One diplomatic official said that relations with Egypt were clearly among the considerations that the government had to take into account when deciding whether or not to ditch the cease-fire efforts and launch a widespread military incursion into Gaza. "Before going into Gaza you have to weigh all the pluses and minuses," the official said. "Of course you have to take into account what it will to do ties with Egypt and with Abu Mazen [Palestinian Authority President Mahmoud Abbas]." The official said that if the cease-fire the Egyptians are trying to broker fails, "it will be clear to Egypt the reason why it failed and they will understand that we have no choice but to take action." Another official said that "realistically, no one sees a cease-fire agreement as working," and it is only in deference to Egypt that Israel is continuing along with the process. Speaking at a Labor faction meeting at the Knesset, Defense Minister Ehud Barak said Monday that Israel was on a crash course with Hamas and that if a cease-fire was not reached a large-scale operation could be launched in the coming days. The operation, he said, could take place in days or weeks without a cease-fire, or in months even if one was reached. Last week, Barak proposed a two-stage deal that would first include a cessation of military operations and terrorism, and then a lifting of the siege over Gaza in exchange for an advancement in negotiations over the release of Schalit. The concept "advancement in the negotiations over Schalit," according to one diplomatic official, means Hamas giving up on some of the prisoners it wants Israel to free. "Fighting is taking place there daily, without a stop," Barak said. "I don't know if we will have a confrontation or a cease-fire... I ask those who want to hurry up and launch a wide-scale operation: Wouldn't it first be worthwhile to exhaust negotiations?" Defense officials said the IDF was in advanced preparations for a large-scale operation in Gaza in case the cease-fire talks did not succeed. Amos Gilad, head of the Defense Ministry's political-military bureau, is scheduled to travel to Cairo for additional talks with Egyptian Intelligence chief Omar Suleiman regarding the cease-fire. Barak said the Egyptians were a side to the talks and interested in obtaining a cease-fire as much as Israel and Hamas. Officials said that Egypt was concerned that if a cease-fire was not obtained and the siege on Gaza continued, Hamas will again try to breach the border with Egypt like it did in January. "The Egyptians are not just mediators sent by the United Nations since they also have an interest in the matter," Barak said. "Our demands are clear: An end to rocket fire from the Gaza Strip and that Hamas stops its military buildup in Gaza."