The 10-month moratorium is set to expire Sunday and Palestinian leaders are threatening to walk out of U.S.-sponsored Middle East peace talks if the building of Israeli settlements resumes.

On the weekend, an Israeli news report by Aaron Lerner's Independent Media Review Analysis (IMRA) suggested Prime Minister Benjamin Netanyahu's office was floating the idea of Pollard's release as a way of winning support in his Cabinet for extending the construction ban.

"Netanyahu would have no problem getting his Cabinet to approve a three-month extension of the settlement construction freeze in exchange [for Pollard's release]," the IMRA report said.

Justice for Jonathan Pollard, a pressure group campaigning for the American's release, quickly reproduced the report on its website and alerted Israeli journalists.

Israeli Army Radio followed up with its own report, quoting "political sources" in Mr. Netanyahu's office as saying the idea of a trade-off for Pollard had been informally submitted to the United States.

The radio station's source said the offer was just "one of many ideas" to get around the impasse of the construction ban. A private individual had been asked to gauge the potential of such an initiative "discreetly and informally" with U.S. officials.

According to the Jerusalem Post, Yuli Edelstein, Israel's Minister of Public Diplomacy & Diaspora Affairs, rushed to deny the story, describing it as "cheap spin".

"There is no such proposal and never was," he said.

Still, Pollard who was sentenced to life in prison in 1987 for working as a spy for Israeli intelligence while a civilian intelligence analyst with the U.S. Navy in Washington, has been the subject of several Israeli attempts to win his freedom.

In 1998, when president Bill Clinton was trying to negotiate a Middle East peace agreement in his final weeks in office, Mr. Netanyahu was enticed into attending the Wye River Plantation peace talks with Yasser Arafat by Mr. Clinton's offer to consider releasing Pollard.

Over the years, the jailed spy has become a symbol of Israeli patriotism for some right-wing elements in Israeli politics. Jerusalem City Council renamed a square near the Israeli prime minister's residence Jonathan Pollard Square.

Mr. Netanyahu has repeatedly endorsed calls for Pollard's release, going so far as to visit him in prison in 2002 and publicly promising during the 2007 election to fight for his release.

In 1998, however, when Mr. Clinton mentioned Mr. Netanyahu's demand for Pollard's release to his staff, he was firmly rebuffed by almost all the top leaders in the U.S. defence and intelligence establishment.

The idea was rapidly shelved, apparently, after George Tenet, then director of the Central Intelligence Agency, threatened to resign if a deal went through.

Still, the topic came up again in 2005, in the run-up to Israel's unilateral withdrawal from Gaza. Israeli newspapers were once again full of suggestions then-U. S. president George W. Bush would release Pollard to help then-Israeli prime minister Ariel Sharon paper over objections to the Gaza withdrawal in his Cabinet.

Pro-Pollard groups in Israel and the United States also launched major publicity campaigns in early 2009 to try and convince Mr. Bush to grant Pollard an amnesty during his final days in office. Nothing happened to either proposal.

pgoodspeed@nationalpost.com---------

WHO IS POLLARD?

National PostJonathan Jay Pollard -He passed on tens of thousands of documents to Israeli intelligence officials, who agreed to pay him $10,000 down and $1,500 a month after he approached them and offered to spy.

-Pollard and his first wife Anne tried to evade the FBI and sought asylum at the Israeli embassy in Washington in 1986, but they were arrested after a security guard turned them away.

-Charged with spying for Israel for 18 months, Pollard pleaded guilty to using his access to classified libraries and computer systems to collect huge amounts of information, especially on Soviet weapons systems and the military capabilities of Arab countries.

-After 25 years, the former civilian intelligence analyst for the U.S. Navy remains in a federal prison in North Carolina.

-In Israel he is idolized by some as a patriotic Jew who placed his commitment to Israel over everything else. Supporters claim he received an excessive sentence and should be released.

-Israel denied any involvement in the case for 13 years. In 1995, however, it granted him Israeli citizenship and in 1998 Benjamin Netanyahu, during his first term in office, admitted publicly the man had been a sanctioned Israeli intelligence agent.