Hizbullah leader Hassan Nasrallah said in a TV interview Sunday that he would not have ordered the capture of two Israeli soldiers had he known it would lead to such a response, an admission Israeli officials said shows that despite all his bluster and bravado, Nasrallah realizes he did not win the recent war. Regarding the killing of three soldiers and the capture of Ehud Goldwasser and Eldad Regev on July 12, which sparked the 34-day war, Nasrallah said, "We did not think, even one percent, that the capture would lead to a war at this time and of this magnitude. You ask me, if I had known on July 11... that the operation would lead to such a war, would I do it? I say no, absolutely not." Nasrallah, during the interview with the Lebanese news station NTV, also said he did not believe there would be a second bout of fighting with Israel. "The current Israeli situation, and the available givens tell us that we are not heading to another round," he said. His comments, according to one senior diplomatic official in Jerusalem, showed that Israel had regained its deterrence. "If he said that had he known what the consequences would have been, he wouldn't have kidnapped the soldiers, this indicates Israel has dissuaded him from doing it again," he said. He attributed Nasrallah's comments, which at times sounded apologetic, to the internal debate taking place inside Lebanon and the harsh criticism of his actions by the non-Shi'ite population. "He needs to explain why he did what he did," the official said. "And his message is that he did not intend these consequences, and that had he known what the consequences would be, he would not have done what he did." Nasrallah's words, the official said, were a marked contrast to Hizbullah's claims that the war was a "divine victory." That Nasrallah felt compelled to make these comments, he said, indicated the depth of his problems in Lebanon. Hizbullah, he said, did not only want to be the arm to export Iran's revolution, but also wanted to be seen as a positive force in the Lebanese political landscape, and this was badly damaged by the war. The Prime Minister's Office, however, had no response to Nasrallah's comments, with one senior official saying that it was necessary to read the entire transcript of the interview and put his words into context. Even before Nasrallah's interview, however, Prime Minister Ehud Olmert bucked the trend that has labeled the war a failure and told the cabinet that if anyone had predicted the recent events a month and a half ago, they would have been accused of "fantasizing." "If someone would have told us that in another month and a half an international force and the Lebanese army would move south, that UN Security Council Resolution 1559 would begin to be implemented, that UN Secretary-General Kofi Annan would say that the international force could dismantle Hizbullah, that there will be an embargo on arms to Lebanon, supervision on the border crossings, and all this while the IDF was in Lebanon and has not been drawn into confrontations, and that there is a sea and air embargo on the country - we would say that person was fantasizing and that it was not necessary to set unrealistic goals but rather realistic ones," Olmert said. He warned that things could change for the worse, "but it is possible to see the beginning of a turning point." Nasrallah, during his interview, said Hizbullah would "not be provoked," and that "there are attempts to enforce Israel's new conditions, such as the deployment of UNIFIL forces in Lebanon's airport, ports and along the northern border with Syria." At the same time, he said that as long as IDF soldiers were in Lebanon, Hizbullah had the "right to resistance," claiming that Hizbullah had shown "restraint and tolerance" but would reserve the right to react "at any time." He also said that Hizbullah would not publicly display weapons in southern Lebanon, except during funerals. "This is our policy - to refrain from displaying weapons. If the Lebanese army notices any gunman, it is its natural right to expropriate the weapons," he said. Defense Minister Amir Peretz, meanwhile, told the cabinet that Hizbullah was "winning points" in south Lebanon by its rehabilitation efforts, and was being assisted by the lack of activity from the international community. According to various reports, Hizbullah was giving out some $12,000 - money believed to be coming from Iran - to help people whose homes were damaged during the war. Peretz reiterated Israel's position that the air and sea blockade of Lebanon would continue, and the IDF would remain in south Lebanon, until the Lebanese army and the enhanced UNIFIL force took up positions in south Lebanon and at border entry points.