Defense Secretary Leon E. Panetta said Monday that U.S. officials have been trying to broker the release of an alleged Israeli spy held by Egypt, and he raised hopes that he could win the prisoner’s release during a visit to Cairo this week.

Ilan Grapel, 27, a dual U.S.-Israeli citizen and a law student at Emory University in Atlanta, was arrested in June in Cairo on suspicion of espionage. Egyptian authorities accused him of gathering intelligence for Israel and trying to sabotage the popular revolution that toppled Egypt’s longtime president, Hosni Mubarak.

Grapel and his family have said he was working as a legal aid volunteer for a refugee organization in Cairo and is innocent.

On Sunday, a day after he was visited in prison by a U.S. diplomat, the Egyptian state-run Middle East News Agency said the government in Cairo was considering Grapel’s release. The news agency said U.S. officials had offered “more political and economic support in return,” but it did not provide details.

At a news conference Monday in Tel Aviv with Israeli Defense Minister Ehud Barak, Panetta declined to comment on the status of the negotiations, saying, “I’ll wait until I get to Egypt.”

Defense Secretary Leon Panetta places a memorial wreath Monday at Yad Vashem in Jerusalem, Israel, during his first trip to Israel as defense secretary. (Win McNamee/AP)

Panetta did not answer directly when asked to comment about a report in Dar al-Hayat, a London-based Arabic newspaper, that he would personally seek to free Grapel from custody and fly him back to the United States on his military aircraft. Panetta is scheduled to meet this week in Cairo with Field Marshal Mohammed Hussein Tantawi, the chief of Egypt’s ruling military council, and other officials.

“We have made our concerns known to the Egyptians about holding that individual,” Panetta said. “We would hope that whether it happens with me or whether it happens at some point in the future, that they do take steps to release that individual.”

Panetta’s aides sought to play down expectations that Grapel’s release was imminent. “The secretary, like other senior American officials, seeks resolution of the issue,” said George Little, Panetta’s spokesman. “He’s not affixing any particular timetable to that process but hopes that it draws to an end soon.”

Grapel was born in New York City. Before enrolling at Emory, he served as a paratrooper in the Israel Defense Forces. Egyptian security officials said they took note of his presence in Cairo after he made repeated visits to Tahrir Square, the focal point of the massive demonstrations that forced Mubarak from office.

Israeli officials have insisted that Grapel is not a spy but have been unable to persuade Egypt to release him. Tensions between the two countries have risen in the aftermath of the Egyptian revolution.

After Grapel’s arrest in June, Israeli Foreign Minister Avigdor Lieberman said that the law student was “maybe a bit strange or irresponsible, but he has no connection to any intelligence service — not in Israel, not in the U.S., and not on Mars.”

“This is a mistake or bizarre behavior on the part of the Egyptian authorities, who have received full explanations from us,” Lieberman added.

While Panetta said he hoped that Egypt would free Grapel, the defense secretary dashed Israeli hopes that the Obama administration was having second thoughts about another spy case.

The Israeli government has been lobbying the White House for the early release of Jonathan Jay Pollard, a Navy intelligence analyst convicted of stealing secrets for Israel. He has served 25 years and is scheduled to remain in prison until 2015.

An Israeli reporter asked Panetta if he could explain why the Obama administration has refused to release Pollard early.

“Obviously he was convicted as a spy,” Panetta replied. “For that reason the president and others have indicated the position of the United States is not to release him.”