Israel PM: Israel stands by refusal to free prisoners for hostages

Hizballah demands release of all terrorists in Israeli jails, starting with 3 Lebanese prisoners, followed by pro-Syrian Druzes from the Golan, then thousands of Palestinians.
Chief of staff Dan Halutz: If our abducted soldiers are not returned, we will throw Lebanon back decades into the past. First Israeli air attacks reported on Lebanese power stations.
Ehud Olmert’s statement was made in a joint appearance with the visiting Japanese prime minister Wednesday. He has called a cabinet meeting for 0700 p.m. Wednesday.
Calls for national unity government to bolster Olmert government for crisis on two warfronts to restore Israel’s deterrent strength.
Defense minister Peretz: Israel holds Lebanese government fully responsible for Hizballah aggression and the safety of the two abducted soldiers. Israel is at liberty to take any action necessary to halt this aggression and free its kidnapped soldiers.
The Lebanese bears responsibility for comitting to disarm the Hizballah terrorists as instructed by the UN Security Council last year.
debkafile adds: Hizballah is now operating on two fronts: Iraq and Israel. The Gideon Shalit hostage case has been incorporated into a deal that brings Jerusalem in direct confrontation with Tehran and Damascus, Hizballah’s two sponsors and backers of Hamas. The chief of staff is conferring with the general staff on a major ground-air operation to strike infrastructure in Lebanon.

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