It is safe to say that the Gilad Shalit saga is now in its final stretch. Assessments by senior Israeli sources range between a prisoner exchange taking place sometime next week and sometime next month. What is clear is that both sides have reached the point of no return.

Too much is at stake for Israel and Hamas, both on the domestic front and in the international arena. Outside the direct mechanics of the negotiations, both sides made major concessions this week which will go a long way to enabling the deal to go down.

Prime Minister Binyamin Netanyahu’s announcement on Wednesday evening that Israel would freeze settlement building in the West Bank (but not in east Jerusalem) for 10 months has been in the offing for months, but the actual timing has everything to do with an impending Shalit deal.

There are two players who are less eager for a prisoner swap to go through. Mahmoud Abbas and parts of his entourage are extremely worried that the release of hundreds of Palestinian prisoners will boost Hamas’s flagging fortunes and further damage Mr Abbas’s tarnished credibility among his own people.

The American administration, which has placed all its hopes on Mr Abbas’s government, will not share the Israeli joy at the return of the country’s lost son for that same reason.

While France and Germany played active roles in the negotiations, the Americans, normally so engaged in every part of the conflict, kept well away from the prisoner issue.

The settlement freeze announcement was essential at this stage to allay American fears that Israel was about to abandon Mr Abbas, and to prevent him from throwing a spanner in the works. Many on the Palestinian side believe that machinations by Mr Abbas and his advisors in the past had pushed the deal back by months.

Hamas also made a major concession on Saturday when it announced it had brokered a deal with the other Islamist factions to stop firing missiles and mortars from the Gaza Strip towards Israel. Over the past 10 months, since the end of Operation Cast Lead, Hamas has not taken part in any of the attacks, but it has done little to stop groups aligned with Islamic Jihad and al Qaida from doing their thing. Forcing them to stop firing Kassams cost a certain amount of political capital, but Hamas does not want to risk anything that may derail the prisoner deal.

Assuming Gilad Shalit will be lighting Chanucah candles with his parents, the question that has to be asked is: why only now? The exact details of the deal are still under wraps but the basics have been clear for at least two years. Hundreds of Palestinian prisoners, including senior leaders and murderers with gallons of blood on their hands, will go free in return for one Israeli soldier.

Many of these are terrorists who it would have been “unthinkable” in the past for Israel to release. But neither will Hamas get all it demanded. Some of the men on their list will remain behind bars, others may be let out, but will be forced into exile for years.

The appointment of a new chief negotiator for Israel, Hagai Hadas, five months ago, certainly lent impetus to the process. The entrance of the German mediator, who skilfully manoeuvred between the sides while tactfully respecting the original Egyptian brokers, made all the difference.

But beyond the inner politics of the negotiations, both sides have had to be subjected to protracted psychological pressure to prepare them for the moment when they walk the final step.

It took long years of blockade and isolation and one devastating military offensive to drive it home to Hamas that their only chance of opening Gaza’s borders, necessary to rebuild Gaza’s infrastructure and regain its previous popularity, was to release Shalit.

It is no coincidence that the exchange will take place just as winter sets in over the Strip and its homeless families.

On the Israeli side, it took a change of government and the departure of those who led the country into the dismal Second Lebanon War. A new leadership can acknowledge that Israel has little choice but to bite the bullet. The only senior figures who have opposed the deal are the chiefs of the Mossad and Shin Bet, Meir Dagan and Yuval Diskin — the only ones already in their current positions when Shalit was taken prisoner.

Once the festivities of Shalit’s liberation are over, Israel will have to endure a period of soul-searching, asking how an entire nation allowed itself to be whipped into hysteria over the fate of one soldier. But no one has any doubt at this stage, the Israeli public has been taken to the brink one time too many.

Despite the attempt to lower expectations, the government will dare not oppose the will of the people again. Three quarters of Israelis are firmly in favour of the deal.

But the wider implications of the deal will test all sides in coming months.

Hamas will certainly issue belligerent statements during the mass celebrations over the release of its prisoners. But once the euphoria wears off, will it use this fillip to re-embark on a path of attacks against Israel or will a more moderate faction emerge, interested in achieving international legitimacy?

The Fatah-dominated PA will have to retain its hold on the areas of the West Bank it currently controls. The consensus within the Israeli defence establishment is thatn while there may be a spike in terror incidents over the next few months, the American-trained battalions currently keeping order and cooperating closely with the IDF will succeed in containing the outbreak, and the process of building a Palestinian economy and civil society will continue.

Will this save Mr Abbas’s political fortunes? They may well be lost by now, but his successor may already be on the scene, if Fatah chieftain Marwan Barghouti is released. He is certainly the most popular Palestinian leader today. If anyone can unify the Palestinians and rebuild ties between the West Bank and Hamas in Gaza, he is the man. But will he be Israel’s next negotiating partner?

That answer lies to a great degree with Israel. While the Netanyahu administration has widely been portrayed as “hardline” and “Israel’s most right-wing government ever”, it is important to note that this week’s cabinet vote over the settlement freeze was supported by all the Likud ministers and by Foreign Minister Avigdor Lieberman. The vote over the Shalit deal is expected to be even more overwhelmingly in favour.

Yet again, the cliché of a right-wing government carrying out a left-wing policy is playing out. A Likud government is proving capable of making the difficult decisions that centrist and leftist governments shied away from.

Gilad Shalit and hundreds of Palestinian prisoners returning home could bring about a long-awaited catharsis.