Israeli sources reported on Sunday that the Lebanon-based Hezbollah group insists on the release of hundreds of Palestinian political detainees in exchange for releasing two Israeli soldiers captured by the group in Lebanon in 2006.

The two soldiers are Eldad Regev and Ehud Goldwasser. The Israeli government was informed of the demands of Hezbollah last week in Berlin by the German mediator, Gerhard Conrad.

Israeli sources reported that the government discussed these demands during a meeting of the security cabinet at the office of Prime Minister, Ehud Olmert, Defense Minister, Ehud Barak, Army Chief of Staff, Gabi Ashkenazi, Head of the Mossad, Me’er Dugan, head of the Shabak, Yuval Diskin, special envoy, Ofar Dekel, and Elan Beran, who was in charge of the file of Ron Arad the Israeli Air-Force Lieutenant Colonel who has been missing in action since 1985.

Israel believes Arad is in the hands of the Amal Shi’ite group after bailing out of his warplane when it was shot down over the Lebanese city of Sidon.

The Israeli government repeatedly rejected the release of Palestinian detainees and Arabs in a prisoner swap deal as “such an issue could boost the popularity of the Hezbollah party in the Palestinian and Arab streets”.

Also, Israeli sources reported that Olmert always insisted that the prisoner-swap deal should be one-phased, and that it should not include the release of Palestinian detainees.

But recently, the families of the two soldiers captured by Hezbollah started pressuring members of the ministerial cabinet to accept the swap deal.

On Sunday, Israeli President Shimon Peres said that negotiations with Hezbollah are complicated and added that news which claimed that a prisoner swap deal is about to be achieved are inaccurate.

Several Israeli military intelligence officers called for declaring the death of the two soldiers, who are believed to be in the hands of Hezbollah, and called for declaring their burial ground as unknown. The officers said that recent intelligence information indicted that there is a high probability that the two soldiers were killed before they were captured.

Also, Israeli Army Radio said that several security officials in Israel called on the government to refrain from releasing the Lebanese prisoner, Sameer Al Quntar, and claimed that releasing him will endanger the life of Corporal Gilad Shalit who is in the hands of the Palestinian resistance.

Al Quntar was captured by Israel in April 22, 1979, who was supposed to be freed in 2004 in a previous prisoner swap deal, but Israel violated the agreement.