American-Israeli Ilan Grapel is to be released this weekend from prison in Cairo, four months after being arrested on charges of "spying" for Israel.

Mr Grapel, a student at Emory University in Atlanta, spent several years in Israel and served in the Paratroopers Brigade. He is to be released in exchange for 25 Egyptians held in Israel on smuggling charges.

The exchange comes on the coat-tails of the Egypt-brokered deal between Israel and Hamas for the release of 1,027 Palestinian prisoners in exchange for Gilad Shalit.

Both Shalit and the freed Palestinians were welcomed home with tumultuous celebrations. But, while Israeli Prime Minister Benjamin Netanyahu is enjoying a boost to his popularity following the deal, his Palestinian counterpart has not made gains among his constituency. Mahmoud Abbas's ashen face said it all as he was forced to share a platform with his Hamas rivals in Ramallah last Tuesday at the ceremony to welcome back dozens of Palestinian prisoners.

The Palestinian President greeted the returning "heroes" in his speech, but no one in the crowd was buying it. Mr Abbas played no part in the deal; indeed, in the past, he had tried to prevent it from behind the scenes. The release of the 1,027 prisoners in return for Shalit highlighted how little of substance he has achieved.

The majority of the prisoners released are affiliated to Hamas, and Israeli security officials stressed this would be an organisational boost for the Islamist movement as much as a publicity coup.

Shin Bet chief, Yoram Cohen, who signed the deal off on the Israeli side, said two weeks ago that one of the chief motivations of the Hamas leadership to do a deal over Shalit has been their desire to upstage Mr Abbas's campaign to gain United Nations recognition of a Palestinian state through a mega-event of their own.

The Fatah-Hamas unity agreement of six months ago is dead. None of its main components has been carried out.

There is no joint cabinet, no co-ordination over security or diplomatic matters and no progress on elections. Meanwhile, each side is entrenching its control of the West Bank and the Gaza Strip respectively.

At the same time, jealous Fatah members, who are supposedly part of the Palestinian Authority that is working with Israel on security matters, are talking about kidnapping an Israeli soldier themselves.