Shouts of joy at prisoners' homecoming

Israel and Hizbollah guerrilla foes carried out a long-awaited prisoner swap on Thursday that brought hundreds of jailed Arabs home to shouts of joy in return for a kidnapped Israeli and three dead soldiers.

Hizbollah threatened more abductions if Israel did not release a last Lebanese prisoner, but the Jewish state vowed to deal harshly with any future kidnappers.

Under the German-mediated deal, three years in the making, Arab prisoners swapped planes at an air base in Cologne with freed businessman Elhanan Tannenbaum and the wooden coffins bearing the soldiers abducted in 2000.

They arrived almost simultaneously in Israel and Lebanon, hours after 400 Palestinian prisoners were released to tearful homecomings in the West Bank and Gaza Strip.

Key to the exchange had been the forensic identification of the dead soldiers.

"My feeling can't be described ... all of us feel great, as if we're born again," said senior Hizbollah official Sheikh Abdul Karim Obeid.

Thousands of people waved yellow Hizbollah flags and fireworks lit the night sky.

Families of the dead Israeli soldiers cried quietly at a solemn ceremony near Tel Aviv.

"Peace shall come and they shall rest," read a Biblical verse above flag-draped coffins.

Tannenbaum had a tearful reunion with his family, but his daughter Keren said he would later be taken for questioning.

Israel has always insisted on getting back its missing and dead, even if it has to pay a high price, but some Israelis were concerned the deal could encourage more kidnappings.

Palestinians were happy to have their loved ones back.

In the West Bank, motorists blared horns and people waved as buses took prisoners past Israeli checkpoints.

Some militants fired in the air and women ululated in celebration.

"I can't believe my eyes," said 53-year-old Imam Hamoudi as she kissed her returning son in the West Bank city of Ramallah.

"That's enough, don't cry," replied Fadel Hamoudi, 23, kissing her hand and hugging her.

Most of the 7000 or so Palestinians in Israeli jails had been seized during the past three years of ongoing violence.

Most of the 31 Arabs flown to Germany and then on to Beirut were Lebanese. A German convert to Islam jailed in 1997 as a Hizbollah agent was also freed. As well, Israel sent bodies of some 60 guerrillas back to Lebanon.

But there was bitterness that Samir al-Qantar, the longest-serving prisoner, was not among those freed.

Hizbollah chief Sheikh Hassan Nasrallah said his guerrillas would capture more Israelis as a last resort if Israel did not release its last Lebanese prisoner.

"We have three choices ... the third choice is this," Nasrallah said, pointing at a large picture of a 2000 ambush during which Hizbollah guerrillas killed three Israeli soldiers and captured their bodies.

"Next time I promise you we will capture them alive," he told a rally in Beirut's southern suburbs attended by prisoners freed earlier.

Nasrallah said the swap was humanitarian, not political.

The exchange paves the way for a second stage of negotiations over the fate of Israeli airman Ron Arad, who bailed out over Lebanon in 1986, as well as four Iranian diplomats kidnapped during Israel's 1982 invasion of Lebanon.

Nasrallah said the group would do its best to obtain information on Arad and would look at "imaginative solutions" with German mediators to secure the release of Qantar before resorting to military action.

He said the Israeli Government was "stupid" not to free Qantar and said it was repeating the same mistake when it quit south Lebanon without freeing the Lebanese prisoners.

Nasrallah dismissed speculation that the group, which played a key role in driving out Israeli forces from Lebanon in May 2000 after a 22-year occupation, would become irrelevant after the release of all prisoners.

"Hizbollah after the exchange is the same as Hizbollah before the swap, it is even more determined to continue on the path of resistance," he told a cheering crowd.

"Hizbollah ... did not change, it will not change."

- REUTERS