To most Israelis, he’s a ruthless killer who deserves to spend the rest of his life behind bars. To Palestinians, he’s a hero who could emerge from prison to become their future leader.

Marwan Barghouti, the Fatah leader, has now emerged as the potential key to a prisoner exchange deal that could free Gilad Schalit, the Israeli corporal held captive by Palestinian militants for nearly ten months. Mr Barghouti’s name reportedly tops the list of 450 Palestinian prisoners that Corporal Schalit’s captors have handed to Israel through Egyptian mediators.

Israel’s Shin Bet security service is now reviewing the list and will offer its recommendations to Ehud Olmert, the Israeli Prime Minister. The submission of the list represents a major breakthrough in the standoff over the kidnapped soldier, seized in a cross-border raid from Gaza. His release is seen as crucial to paving the way for future peace talks.

The list is said to include several senior Palestinian political figures including Ahmed Saa-dat, a member of the Palestinian Parliament, and Sheik Ab-del Khaliq al-Natsheh, a leader of Hamas.

Israeli sources say that the list also includes those with “blood on their hands” — prisoners who have killed Israeli citizens.

Mr Barghouti, who is serving five consecutive life sentences for orchestrating murders in the second intifada, was singled out by Palestinian sources close to the negotiations as their highest-priority prisoner.

“I am cautiously optimistic,” Mr Barghouti recently told his lawyer. “There are several good indications from several different sources,” he said.

Despite his crimes, he is viewed by some Israeli intelligence services as a skilled politician and possible negotiating partner.

Yossi Alpher, a former official in Mossad, the Israeli intelligence service, said: “It’s clear we’re going to have to release some people with blood on their hands. Barghouti didn’t pull the trigger himself. He’s considered relatively moderate and a desired leader for Fatah.”

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