Israel and Hizbollah on Wednesday completed their long-awaited prisoner swap, with the Lebanese Shia group handing over the remains of the two Israeli soldiers whose capture triggered the 2006 Lebanon war.

In return, Israel released five Lebanese prisoners and handed over the remains of 200 Lebanese and Palestinian fighters killed in clashes with Israeli forces. Among the men freed was one of Israel’s highest-profile prisoners: Samir Kuntar, a Lebanese militant who spent almost 30 years in jail for an attack that killed five Israelis, including a father and two of his daughters.

Hizbollah celebrated the exchange as an important victory and the five men were given a hero’s welcome at a rally in Beirut attended by Lebanon’s political leadership. The Shia group, which cited the release of Lebanese prisoners held by Israel as an important goal, described the handover as a “victory from God”.

Hizbollah said Wednesday’s exchange was a result of the movement’s self-proclaimed “divine victory” in the 2006 war with Israel. It might help Hizbollah restore its image as a resistance movement dedicated to the fight against Israel after its standing was tarnished by its use of force against other ­Lebanese factions in May.

For Israel, by contrast, the return of the bodies of Ehud Goldwasser and Eldad Regev served as a painful reminder of the country’s futile efforts to force their release in the summer war of 2006. Despite Israel’s crushing military superiority, the conflict failed to inflict a lasting blow on Hizbollah.

Israelis marked the exchange in a sombre mood. The government had cautioned repeatedly that the men were almost certainly dead but it was not until pictures of two black coffins being unloaded from a truck at the Israeli-Lebanese border were broadcast that their fate was confirmed.

Israelis were overwhelmingly in favour of the swap, although the release of Mr Kuntar – one of the most reviled prisoners held by Israel – made it a wrenching decision for the government. The country’s intelligence and security community warned that swapping live prisoners for dead Israelis would encourage further abductions. There were also concerns that the deal would complicate negotiations over the release of an Israeli ­soldier held by Hamas, the Palestinian Islamist group.

The sharply diverging moods were encapsulated by the huge banner erected by Hizbollah close to the border crossing where the handover took place: “Israel sheds tears of pain – Lebanon sheds tears of joy,” it read in English. In a dig at the Israeli prime minister, the banner also carried a picture of Ehud Olmert with his head buried in his hands and the slogan “Humiliation guaranteed by Olmert”.

Lebanon observed a national holiday on Wednesday and, while the swap came as a result of Hizbollah’s actions, the country’s leadership was keen to cast it as a national event. A spokesman for Michel Suleiman, the president, described it as “national day”. The country-wide celebrations followed the formation of a government of national unity in which Hizbollah and its allies have veto power over important decisions.

Hizbollah’s supporters were in euphoric mood: “We are the only Arab country that has liberated all its prisoners form Israeli jails,” said Mohammed, a student, echoing Hibzollah’s official line.

An Israeli government spokesman called the celebrations marking the return of “the child murderer Samir Kuntar . . . reprehensible and simply atrocious”.s

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