Hizbullah leader Sheikh Hassan Nasrallah said Tuesday there was "positive progress" in negotiations to swap captive IDF reservists Ehud Goldwasser and Eldad Regev for Lebanese prisoners in Israel, leading to speculation that a deal involving Israel's release of Lebanese terrorist Samir Kuntar could be in the works.
"I assert that there are strenuous negotiations, continuing sessions that will be resumed within days," Nasrallah said in a speech broadcast on Hizbullah's Al-Manar television station.
"For the first time, I can speak about hope, about optimism and about positive progress and about an opportunity to reach a great achievement and a full exchange," he said. "I can speak for the first time about positive progress in the main negotiations over the two soldiers and the prisoners," he said.
Any such deal, however, may force the government to decide not to link it with IAF navigator Ron Arad, missing since 1986, or to information about the three IDF soldiers who went missing during the Battle of Sultan Yakoub in 1982.
Nasrallah referred to a document he claimed was given to Israel that showed where Arad had been searched for and said that no traces had been found of the captured navigator.
The Hizbullah leader said he did not have anything to say that would shed light on Arad's fate and seemed to be calling for a deal excluding the air force navigator.
Nasrallah's comments contradicted reports earlier in the Lebanese newspaper Al-Akhbar that Hizbullah had given Israel documents written by Arad around the time of his disappearance.
Sources in the Prime Minister's Office had no comment on Nasrallah's speech, saying only that "Israel listens carefully when he speaks."
They would also not discuss the nature of the information handed over to Israel.
Nasrallah's speech Tuesday was his first public address since Hizbullah returned the body of Beersheba resident Gavriel Daweet on Monday night, along with information believed to be related to the Arad case, in exchange for the bodies of two Hizbullah fighters, and a mentally disabled Hizbullah prisoner.
Daweet drowned in the Mediterranean and washed up on Lebanese shores almost three years ago.
Nasrallah said Monday's swap was not meant to build trust between the two sides, but rather as a goodwill gesture initiated by an international mediator.
The Hizbullah leader demanded the release of Kuntar, who is serving multiple life terms for the killing of three members of the Haran family and policeman Eliahu Shahar in Nahariya in 1979. He also demanded that Israel free four Iranian diplomats allegedly held by Israel, as well as four Hizbullah guerrillas and a Lebanese citizen convicted of espionage.
Prime Minister Ehud Olmert hinted that Israel might have to pay a painful price for the return of Goldwasser and Regev when he spoke Tuesday of the Daweet swap at a conference on immigration and absorption in Ashdod.
"For years, our enemies have been trying to raise the price for Israel to pay for scraps of information, and even more for abducted soldiers and civilians or, heaven forbid, remains," he said.
"This is an ugly and cynical commerce in feelings, in the feelings of Israeli society. At times there is no choice but to pay the painful price, but it seems to me that the step completed last night was carried out in a balanced way and at a price that Israel was able to bear."
Olmert said that not a day went by that he did not deal with or think about Israel's kidnapped soldiers.
"People keep asking when they will come back, and they have a right to ask, but yesterday's exchange proves that there is movement and that we are constantly trying to find out the fate of all Israeli citizens and working to make sure that they return to within our borders," he said.
"Yesterday, we passed a certain stage of the process, but unfortunately, as I said, the process of returning Udi [Goldwasser] and Eldad [Regev] in the North and Gilad [Schalit] in the South is lengthy," he said.
Goldwasser's mother, Miki, said Tuesday after hearing Nasrallah's speech that she hoped he would stand by his word.
"As far as we know, Nasrallah honors his words. Because he made a commitment in front of his people about the negotiations, let us hope that something will come out of it and that he meant what he said," she told The Jerusalem Post.
Ruth Eglash, Tovah Lazaroff and AP contributed to this report.â€¢