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Bodies, prisoners swapped

Israel and the Iranian-backed guerrilla group Hezbollah on Sunday carried out the largest swap of prisoners and bodies since their conflict in southern Lebanon began 14 years ago.

The exchange followed three months of secret negotiations brokered by Bernd Schmidbauer, an aide to German Chancellor Helmut Kohl, and it kindled hopes for better cooperation between Israel and the guerrillas, whose battles erupted into widespread fighting in April.

Neither Israel nor Hezbollah relinquished the prisoners most eagerly sought by the other side. But by day's end, the two sides were well on their way to completing an exchange that is to grant freedom to 45 Shiite Muslims from a jail in Israeli-occupied southern Lebanon and the return of more than 100 Hezbollah bodies in exchange for the remains of two Israeli soldiers last seen in 1986.

Acceptance of the terms marked an important policy decision by Israel's new prime minister, Benjamin Netanyahu, who said he hoped it would lead to further flexibility from Hezbollah, also known as the Party of God, and its two major sponsors, Syria and Iran.

"The return of our dead is a step in the right direction," Netanyahu said Sunday afternoon. "I hope that we can anticipate additional steps in the near future."

The exchange, carried out via an aircraft, trucks and buses that shuttled freed prisoners and coffins across the Israeli-Lebanese frontier, was the first between the sides since 1991.

It reflected an easing of policy by Israel, which had insisted that any further swap include information about Capt. Ron Arad, a navigator in the air force who is the only Israeli missing in Lebanon known to have survived capture.

But officials conceded that the accord provided them with no new information. Hezbollah and Iran have denied having any information about Arad's whereabouts.

Among its Shiite prisoners, Israel still holds two top Hezbollah officials, Sheik Abdel Karim Obeid and Mustafa Dirani, kidnapped by its commandos as potential bargaining chips.

Netanyahu's government has also expressed interest in a limited deal to halt hostilities in southern Lebanon, the last active front in the Arab-Israeli wars.