Police said the gunman had not slept during the siege. Officers said he briefly broke down and cried during negotiations, complaining of fatigue.
The letter, published in the daily France-Soir and described as genuine by police, said the children would give 'a blood sample with or without medical assistance with a variable flow which could lead to serious after- effects or death'.
The letter was passed to police on Thursday. Police said that the man, described as being in his early 30s, calm and controlled, was showing 'frightening determination'. The letter said that parents could substitute for children in order to suffer the 'ill- treatment'.
The disclosure of the letter added a sinister note to the unprecedented hostage-taking which, despite the constant threat, had hitherto been remarkable for its lack of violence. On the first day, witnesses reported that the children, playing with Laurence Dreyfus, their teacher, were calm and well treated.
The letter was signed 'HB', the same initials that appeared at the site of an explosion at an underground car park in Neuilly last Saturday. That explosion, which did little damage, was apparently the subject of another letter sent to France-Soir which promised a minor diversion followed by a more serious event, presumably the hostage-taking. On Thursday, the gunman told a television journalist whom he had summoned that his motives were purely financial.
The gunman's letter to police, often confused, contained his demand for a 100m-franc ( pounds 12m) ransom, to be delivered in used banknotes, Deutschmarks and gold bars. The Bank of France said it had released the sum and radio reports said it had already been taken in several sacks to Neuilly under police guard.
In his letter, which police noted contained no spelling mistakes and indicated a good level of education, the gunman asked for journalists to be placed at various points on the motorway going south of Paris to ensure his getaway. The gunman also talked of his 'elimination', apparently suggesting that police fake his death to save face. 'Only the announcement of my tragic disappearance, with the total destruction of the loot, will allow me to disappear in the eyes of all, bringing the end of the hunt and the end of this matter,' the gunman wrote.
Outside the school, the parents of the remaining children spent an all- night vigil. Nicolas Sarkozy, the Gaullist Budget Minister and mayor of Neuilly, stayed with them except for a short break when he attended a crisis meeting with Edouard Balladur, the Prime Minister, and Charles Pasqua, the Interior Minister, early yesterday morning. Mr Pasqua cancelled a scheduled visit to Corsica to supervise the operation.
About 70 police commandos surrounded the school. But the authorities repeatedly said that they would not use violence to free the children. The gunman, who said that a bag strapped to his body contained explosives, said in his letter: 'I shall not be caught alive and I am determined to blow everything up if I fail.'
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