From Ynet News, 1/7/08, by Reuters:
Lebanon said on Tuesday a prisoner swap deal reached between Israel and Hizbullah marked a "big failure" for Israel, which had earlier refused to agree to such a plan.
Prime Minister Ehud Olmert secured cabinet approval on Sunday for a prisoner swap with Hizbullah, which would see Israel free Samir Kuntar and four Hizbullah fighters for IDF captives Ehud Goldwasser and Eldad Regev. Prior to the cabinet vote on the proposal, Olmert said that according to the information currently in Israel's hands, the two are most likely dead.
"The release of the prisoners through a German mediator, after this long time and according to the conditions published in the media, marks a big failure, and a very big failure of Israel 's policy which refused, before the July 2006 war, to seal a complete exchange deal," a Lebanese government statement said. ... "This deal ... is a new and clear condemnation for Israel , its tactics and its policies."
In additional to the five Lebanese prisoners, Israel will also release an undisclosed number of Palestinian prisoners and the bodies of Lebanese and Palestinian gunmen killed since 1978 and buried in Israel. The deal is expected to take place within several days.
In parallel to the Hizbullah talks, Israel has said it is interested in opening peace talks with Lebanon, a move the Lebanese government has rebuffed. Lebanon's Prime Minister-designate Fouad Siniora has often said Lebanon would be the last Arab country to sign a peace treaty with Israel.
Also see previous JIW posts here and here.