Al-Hayat newspaper claimed on Sunday that Ilan Grapel, an Israeli-American citizen accused of spying for the Mossad, will depart Egypt with the US secretary of defence, Leon Panetta, on Tuesday.
The unnamed official source added that what Grapel did was not espionage and thus he can be released in return for economic benefits for Egypt.
US congressman Gary Ackerman, who is lobbying for the release of Grapel, offered an increase in economic support for Egypt.
The family of Grapel visited him in his jail with the presence of the American consul in Cairo last Thursday.
Grapel was arrested in Cairo in June and accused of being an Israeli spy and sowing sectarian chaos in Egypt following the ousting of former president Mubarak in February. His case created controversy due to his constant visits to Tahrir square during the protests.
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