Six Egyptian students captured sneaking into Israel have been exchanged for an Israeli businessman convicted in Egypt as an Israeli spy.
The exchange took place at the Taba border crossing near the southern Israeli city of Eilat.
Businessman Azzam Azzam, the Arab-Israeli who was freed, was reported to have flown from Eilat to an unspecified location for medical tests before returning to his family home in the north of Israel. His brother, Iftam Azzam, told Israel Radio he was overjoyed at the release.
Mr. Azzam called on the whole state of Israel to "celebrate with us."
Azzam Azzam, a Druze, was arrested in Egypt in 1996, and convicted a year later on spying charges. He was sentenced to 15 years in prison. Israel has denied he was one of its agents.
The six Egyptian students have been held in Israel since August for allegedly crossing the border illegally with the intention of kidnapping Israeli soldiers. Their arrest, along with the recent shooting of three Egyptian policemen along the Egyptian-Gaza border had soured relations between the two countries.
The prisoner exchange follows meetings last week between Israeli Prime Minister Ariel Sharon and Egypt's foreign minister and intelligence chief.
There have been recent indications of a thawing of what some Israeli officials have called a "cold peace" between the two Middle East neighbors.
Israeli Cabinet Minister Meir Shitrit referred to this improvement in an interview with Israel Radio. He said a warming of relations has brought the likelihood of further concessions from both sides. Mr. Shitrit said he looked forward to such developments, adding that, after 30 years of cold peace, it was about time to turn it into a real peace.
Along with news of the prisoner exchange came a report on Israel's Army Radio that efforts are being made to arrange a meeting between Prime Minister Sharon and Egyptian President Hosni Mubarak. Senior Israeli officials were quoted as saying the mutual trust between the two countries increased considerably after President Mubarak's recent statement that only Ariel Sharon can bring peace to the Middle East conflict.
In addition, Israel and Egypt have discussed closer cooperation to ensure a calm transition in the Gaza Strip after Israel's planned withdrawal from the area next year. Both sides agreed on the deployment of additional Egyptian forces on the Egyptian side of the border at Rafah. Egypt has also agreed to train Palestinian police.
But Israel's former ambassador to Egypt, Shimon Shamir, told the radio he thinks the peace with Egypt will remain a "cold peace," so long as the Intifada continues, and Egyptian public opinion remains hostile toward Israel.