Israel and Hezbollah set to swap prisoners

JERUSALEM (Reuters) - Israel and Lebanon's Hezbollah guerrilla group were set to swap prisoners on Wednesday two years after the two sides fought a month-long war.

Under a deal mediated by a German intelligence officer, Israel was to free five prisoners in exchange for two soldiers captured by Hezbollah guerrillas in a 2006 cross-border raid, who are widely presumed dead, government officials said.

Israel will also hand over the bodies of 200 Arabs killed while infiltrating northern Israel, and Hezbollah will return the remains of Israeli soldiers killed in south Lebanon.

The International Committee of the Red Cross (ICRC) said it had been asked by both Israel and Hezbollah to arrange the exchange, due to begin around 9:00 a.m. (0600 GMT) on Wednesday, in a complex process that could take hours.

Hezbollah was expected to hand over the soldiers, and only after they were identified, Israel would begin to free prisoners and guerrillas' remains to Lebanon, Israeli media said.

A Lebanese security source said it may take until Thursday to complete the transfer of all the guerrillas' remains.

"We think, we hope, especially, it is possible to do it in one day. But it's definitely going to be a long day," Jordi Raich, head of the International Committee for the Red Cross in Lebanon told Reuters.

The Israeli army said it had sealed the border area late on Tuesday night in preparation for the exchange.

Among those slated for release was Samir Qantar, who had been serving a life prison term for the deaths of four Israelis, including a four-year-old girl and her father, in a 1979 attack with a Palestinian guerrilla group on an Israeli town.

Israeli President Shimon Peres set the prisoner swap in motion by issuing a formal pardon for Qantar, reviled in Israel for his role in that attack.

Qantar was 17 at the time of the attack and he has said that the father was shot by Israeli soldiers who also wounded him, and that he doesn't remember what happened to the girl.

"BITTER AND UNBEARABLE"

In a statement, Peres said he felt "bitter and unbearable pain" at the decision and that it "in now way constitutes forgiveness... I neither forget nor forgive," but that Israel was obligated to win the soldiers' release.

Israel's cabinet approved the deal overwhelmingly by a vote of 22-3 on Tuesday. Several ministers dissented against trading prisoners for the bodies of soldiers.

Israeli Prime Minister Ehud Olmert had described Qantar as the last bargaining chip for word on the fate of Israeli airman Ron Arad, who disappeared after bailing out during a bombing run on Lebanon in 1986.

But Israel said a report supplied by Hezbollah on Arad had failed to shed new light on his fate.

Hezbollah has made Qantar's freedom a central demand. Many in Lebanon believe Israel's refusal to free Qantar earlier prompted Hezbollah's cross-border raid in 2006 that led to a war that killed some 1,200 Lebanese and 159 Israelis.

The other Lebanese prisoners being released were identified as Maher Qorani, Mohammad Srour, Hussein Suleiman and Khodr Zeidan. They were expected to receive a heroic welcome of fireworks and rallies in Lebanon, where a public holiday was declared.

(Additional reporting by Nadim Ladki in Beirut; editing by Sami Aboudi)