Can Israel Free Its Hostages?

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Karnit Goldwasser holds a picture of herself and her husband Ehud 'Udi' Goldwasser in front of posters of him, Eldad Regev and Gilad Shalit. It is believed that Goldwasser and Regev are presently held captive by Hezbollah; Shalit by Palestinian militants in the Gaza Strip.

In a Tel Aviv park last Thursday, more than 40,000 people gathered to remind Prime Minister Ehud Olmert that the fierce 34-day attack on Lebanon failed to achieve one crucial goal: to free two Israeli soldiers kidnapped by Hizballah militants. And a smaller but no less lethal military operation in Gaza — in which more than 200 Palestinians were killed — has yet to rescue a third Israeli soldier who was grabbed in June by Palestinian militants.

The Palestinian and Lebanese militants holding the Israeli soldiers make no secret that they grabbed them to swap for prisoners held in Israeli jails. Now that force has not succeeded, Olmert must play the militants' game and negotiate for their release. It is hardly unprecedented for Israeli prime ministers to do so; even Ariel Sharon, Olmert's hawkish predecessor, presided over an exchange of hundreds of Lebanese and Palestinian prisoners for the remains of some Israeli soldiers killed in Lebanon.

Olmert has chosen Ofer Deker, an Arabic-speaking former deputy head of Shin Beit, the Israeli equivalent of the FBI, to handle the discreet bargaining. Israel is also contacting all possible mediators, including the United Nations, Egypt, France, Germany and Qatar — anyone who is willing and able to open up lines of communication with the two groups behind the kidnapping. Israeli and Arab newspapers are full of often contradictory reports about possible terms for the hostages' release. The latest, as yet unconfirmed, claims that Gilad Shalit, the 18-year-old soldier seized by Palestinian militants, will soon be freed through Egyptian efforts, and in exchange Israel will began a phased release of up to 800 Palestinian prisoners.

For Israelis, bringing back their captured warriors from the battlefield is a huge emotional issue; the prime minister knows only too well that Israelis never forgave the government in 1986 for haggling too much with kidnappers holding airman Ron Arad. This angered his captors, negotiations broke down and Arad was never found.

Yet neither group of kidnappers has yet released any videos or photos proving their captives are still living, usually a first step in negotiations over hostages. Paul Conneally, Deputy Head of Delegation in Israel for the International Committee for the Red Cross (ICRC), says his organization is in touch with "those involved" in holding the soldiers, and was given assurances that all three are healthy and well-cared for. But he says, "We need proof of life."

So do the Israelis. But even that could come with a price. When asked by intermediaries if the captors would be willing to provide signs of life, one captor replied, "Nothing is free." The Palestinians and Hizballah also refused Red Cross pleas that three Israeli prisoners — Eldad Regev and Udi Goldwasser, along with Shalit — be allowed to contact their families.

In the case of Shalit, the Israelis have plenty of Palestinian prisoners for an exchange. For starters, the Israelis will almost certainly release more than 30 parliamentarians belonging to the Hamas-led government, who were arrested after Shalit's capture, presumably to be used as bargaining chips. A cell of the military wing of Hamas, along with other Palestinian militant groups, is thought to have carried out the raid on an Israeli army post near Gaza in which Shalit was captured. The Israelis are also holding thousands of Palestinians for alleged terrorist crimes, and some of these may also be thrown into the swap.

Hamas sources in Gaza tell TIME that talks over Shalit's release could lay the groundwork for a wider truce between Israel and the Palestinian authorities. Hamas sources say their militant leaders are offering a cease-fire and will stop lobbing rockets into Israel from Gaza if Israel lifts its blockade on the Palestinian coastal strip. Deputy Prime Minister Shimon Peres also made clear Tuesday that the return of Shalit would likely be followed by talks between Palestinian Authority President Mahmoud Abbas and Olmert — a significant development since Abbas looks set to work together with Hamas in a national unity government.

Negotiating the release of the two prisoners held by Hizballah will be trickier. The Israelis have only 23 Lebanese prisoners to trade, most of them seized in last month's fighting. So far, The ICRC has received no response from Israeli authorities on its demands for access to alleged Hizballah prisoners. To strengthen their bargaining hand, the Israelis carried out a commando raid in Baalbek valley, seizing five members of the Nasrallah family — assuming they belonged to the same family as Hizballah chief Hasan Nasrallah. But when they learned that the captive Nasrallahs were not related to the Hizballah leader — one was a greengrocer, another a plasterer — the Israelis sent them back to Lebanon with apologies.

Israeli military officials say they haven't given up on the possibility of staging a rescue operation to free the hostages. Palestinians in Gaza say that Israeli intelligence officers are squeezing their informers for any scrap of evidence that might lead them to Shalit's captors. In Lebanon, the task is more daunting; the last war exposed that Israeli intelligence lacks the contacts to penetrate Hizballah as deeply as they have the Palestinian militant outfits. During the campaign in Lebanon, according to various Israeli news reports, Israeli commandos raided a hospital in Baalbek, where an Iranian doctor had supposedly treated Goldwasser and Regev. But no details have surfaced as to whether the commandos reached the Iranian doctor or are close to finding out where the two captives are being held.

Olmert's popularity was damaged by the perception that he conducted the Lebanon war badly, and, as the Tel Aviv protest shows, he is under increasing pressure to free the hostages. Nasrallah, on the other hand, is in no hurry. The militant cleric says that he will start talking about the fate of two soldiers only after Israel withdraws its troops completely from Lebanon.

Meanwhile, the family of hostage Regev, 26, a law student who enjoys coaching soccer, waits for news of their son from the Israeli authorities. It has been a while since the phone rang. "When they have information, they tell us," says Eldad's older brother. "Right now they have none. Since they were captured, we have heard nothing about their condition. We don't know if they are hurt. We are pleading with everybody to give us some sign of life."

But until Israel makes an opening gesture for the kidnappers, even that may not happen anytime soon.

With reporting byJamil Hamad/Ramallah and Rebecca Leicht/Nahariya