Dispelling reports of a deal with Hamas, Prime Minister Ehud Olmert on Monday said freeing Palestinian prisoners in exchange for a captured Israeli soldier would be a "major mistake" and said there can be no negotiations with the "bloody organization."
The comments by Olmert and Mashaal signaled a deadlock in the crisis over Shalit's June 25 capture, with no end in sight to the Israeli incursion in Gaza that has killed more than 54 Palestinians since it was launched June 28. There have been reports that Egyptian and Turkish mediators were close to brokering a deal, but the two sides appeared to still be far apart.
Three militants were killed Monday in two Israeli airstrikes, and five people, including an 8-year-old girl, were wounded when an Israeli missile targeted a car the army said was filled with explosives.
A third airstrike hit an area in eastern Gaza City, killing at least one person and wounding several others, Palestinian hospital officials said. The army said it targeted three militants who had an antitank missile near the Karni cargo crossing between Gaza and Israel.
A second explosion in northern Gaza killed another Palestinian and injured at least three others in the northern town of Beit Hanoun, medical officials said.
Despite the Israeli offensive, militants launched three rockets Sunday into Israel, wounding one person in the Israeli town of Sderot and damaging a house.
Olmert told reporters that the violence in Gaza would not deter him from his plan to leave the West Bank — despite indications that Israelis' support for such a withdrawal has been hurt by the violence that followed the Gaza pullout last year, including the current standoff over Shalit.
"I am absolutely determined to carry out the separation from the Palestinians and establish secure borders," he said. Olmert wants to withdraw from most of the West Bank by 2010 to allow the Palestinians to gain independence and to secure a long-term Jewish majority for Israel.
Olmert defended his army's offensive, saying Israel had "no choice" but to launch it in order to win Shalit's freedom and halt a barrage of militant fire into Israel. He rebuked European Union accusations that Israel was using disproportionate force, saying Palestinian rockets were terrorizing tens of thousands of residents in southern Israel.
"Can one measure the anxiety, the fear, the shocks, the lack of security?" he asked. "When was the last time that the European Union condemned this shooting (of rockets) and suggested effective measures to stop it?"
Continued rocket fire out of Gaza, along with Israel's recent invasion, has raised questions about whether Olmert can carry out the West Bank pullout. The withdrawal could put major Israeli population centers well within the range of Palestinian rockets.
Olmert said the violence cannot halt a process of separating the Israelis and Palestinians that began with the Gaza withdrawal.
"We want to separate in a friendly manner and to live alongside each other ... in a peaceful way," he said. "If the terrorist organizations will impose a violent confrontation, both Israelis and Palestinians will have to bear the consequences. That can't stop the inevitable process of separation of Israelis and Palestinians."
Israel expanded the operation last week into northern Gaza to halt months of rocket attacks. Tanks and ground forces have entered the area, and Israel has carried out numerous airstrikes, leading to widespread destruction.
Olmert said Israel is not trying to topple the Palestinian government, although he said Hamas leaders are "directly involved in terror."
"We have no particular desire to topple the Hamas government as a policy. We have a desire to stop terrorists from inflicting terror on the Israeli people," he said, declining to give a timetable for the operation.
The Israeli invasion, arrests of Hamas Cabinet ministers and threats to assassinate the group's top leaders have prompted accusations that Israel is trying to topple the democratically elected government.
The Hamas-linked militants holding the soldier, as well as top Hamas leaders, have called on Israel to release hundreds of Palestinian prisoners to help end the standoff. An estimated 9,000 Palestinians are currently jailed by Israel.
In his first public appearance since the crisis erupted, the Syria-based Mashaal insisted Israel must free some prisoners before Shalit can be released.
"The Palestinian people are united on insisting the that the (Israeli) prisoner soldier be traded for (Palestinian) prisoners in Israeli jails," he told a news conference. "We say to the world that we as a true people and movement do not forget our prisoners."
"The solution is simple: an exchange. But Israel refuses that," he said, adding that the Israelis are "under an illusion" if they think that by escalating their offensive they will win the soldier's release.
Olmert ruled out negotiations with either Mashaal or the Hamas-led government, saying it could encourage more attacks. "This is not a government which is influenced by terror. This is not a government which sympathizes with terror. This government is terror," he said.
Mashaal struck a similar tone in describing Israel and the United States.
"Today, Israel is really terrorizing our people ... Israel and America, which talked too much about this terrorism in past are the worst, severest and ugliest examples of terrorism," he said.