Militants issue Israel hostage demands

GAZA CITY (CNN) -- Palestinian militants distributed a statement Monday saying they will provide information about a kidnapped Israeli soldier if Israel agrees to release all female prisoners and all children under 18 being held in Israeli jails.

The statement appeared to be the opening gambit by the militants in the negotiations for the release of Israeli Cpl. Gilad Shalit, whom the flier referred to as "missing" rather than "kidnapped."

The statement surfaced as Palestinian officials scrambled Monday, bargaining with the militants in an attempt to free the kidnapped Israeli corporal, while appealing to Israel not to "complicate" the situation with military incursion.

Hamas spokesman Ghazi Hamad told CNN that members of the Hamas military wing are among those holding Shalit, 19. He was abducted Sunday morning after a raid by Palestinian militants who tunneled into Israel.

He said Palestinian Prime Minister Ismail Haniya was in "constant contact" with Palestinian Authority President Mahmoud Abbas.

Asked if he knew of Shalit's condition, Hamad said, "I know that he is well."

Israeli officials had said earlier they understood Shalit had been lightly wounded.

The flier, distributed to news organizations and passed out on the streets of Gaza City, came from Izzedine al Qassam Brigades, the military wing of Hamas; the Popular Resistance Committees, an umbrella group that includes militants from Fatah, Islamic Jihad and Hamas; and a previously unknown group calling itself the Army of Islam.

Shalit was captured Sunday morning when Palestinian militants tunneled into Israel and attacked an army post near the Gaza-Israel-Egypt border, according to the Israeli army. Two other Israeli soldiers were killed. (Watch explosion at post and Israeli reaction -- 2:21)

Israeli Prime Minister Ehud Olmert said he holds the Palestinian Authority government responsible for the abduction and for the safe return of Shalit.

He promised a harsh response if Shalit is not returned, and Monday a large force of Israeli infantry backed by tanks ringed Gaza.

Israel has asked its international partners to put pressure on the Palestinian government in an effort to secure the release of Shalit, and intense negotiations appeared to be under way.

But Olmert on Monday rejected negotiating with the captors and threatened a "broad and ongoing" military offensive, according to The Associated Press.

U.S. State Department officials said Secretary of State Condoleezza Rice had spoken with Israeli Foreign Minister Tzipi Livni twice since the kidnapping. Livni, they said, urged Rice to put pressure on Abbas to help secure the soldier's release.

Rice spoke with Abbas on Monday, the officials said.

The State Department called for the soldier's immediate release and urged the Israelis and the Palestinians to "exercise restraint."

In addition to Rice's calls to Livni and Abbas, U.S. ambassadors in Egypt and Israel have reached out to governments in the region to resolve the issue, State Department Spokesman Sean McCormack said Monday.

"We urge both sides to exercise restraint and avoid steps which further escalate the situation," McCormack said. He added, "It is the responsibility of the Palestinian Authority government to stop all acts of violence."

Egyptian officials were involved as mediators between the militants and Palestinian government officials.

France is among those seeking the release of Shalit, whose father is French, according to a statement from France's Foreign Ministry.

Hamad said the Palestinian government is asking Israel not to resort to a "military escalation" and avoid "making the situation more complicated."

A small contingent of Israeli troops remained inside Gaza, according to Israeli military sources.

Israel's political-security Cabinet late Sunday authorized the government to "take all necessary actions" to secure the release of Shalit, according to a statement on Olmert's Web site.

The Cabinet also agreed to allow Olmert and Defense Minister Amir Peretz to decide the details of any military action against Palestinian targets.

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