Mohammed Ali Hamadi has been released from prison and has left Germany, Doris Moeller-Scheu, a spokeswoman for the Frankfurt prosecutor's office, said on Tuesday. She said she did not know his destination.
Soon afterwards, the US said it was disappointed with Germany's decision, adding that it wanted Lebanon to turn over Hamadi for trial in the June 1985 killing of Robert Dean Stethem.
She said Hamadi's case came up for a regular legally mandated review by a parole court and he was released from a prison in Schwalmstadt in southwestern Germany after an expert assessment and a hearing.
Martin Jaeger, a spokesman for the German Foreign Ministry, said there was no connection between his release and that of Susanne Osthoff, a German woman released recently after spending more than three weeks as a hostage in Iraq.
The Frankfurt prosecutor's office too denied any link to Osthoff's release. Hammadi was released after a standard review of his case, a lengthy process that began long before Osthoff was seized, Moeller-Scheu said.
Under German law, Hamadi became eligible for release after serving 15 years. He spent over 18 years in jail in Germany.
"We have demonstrated over the years that when we believe an individual is responsible for the murder of innocent American civilians, that we will track them down and that we will bring them to justice in the United States," State Department spokesman Sean McCormack.
Was the parole a quid pro quo
for Susanne Osthoff's release?
He said the US was talking with the Lebanese government about Hamadi, but the issue has been complicated because the US does not have an extradition treaty with Lebanon.
McCormack said the US sought jurisdiction over Hamadi after he was arrested and over the years has repeatedly sought to have him tried in the US
A Lebanese security official and the Hizb Allah on Tuesday confirmed Hamadi's return.
Hamadi was released and returned to Beirut a few days ago, a Hizb Allah official in Beirut told The Associated Press, speaking on condition of anonymity.
Hizb Allah connection?
A Lebanese security official also confirmed Hamadi had arrived four days ago aboard a commercial flight from Germany, but would not elaborate.
It was not immediately known where Hamadi went after his entry to Lebanon.
Mohammed Ali Hamadi was said
to be a member of the Hizb Allah
A US official who spoke on condition of anonymity said Hamadi is in temporary Lebanese custody.
Hizb Allah is not known to operate in Iraq, though security experts say it has links to some of the many Shia groups there. These groups have kidnapped people in Iraq, often for ransom.
A Lebanese source said a senior German intelligence officer visited Damascus early this month but did not disclose the purpose of the trip. Syria is a key backer of Hizb Allah.
TWA flight 847 from Athens to Rome was hijacked on 14 June 1985 to Beirut, where the hijackers shot US navy diver Robert Dean Stethem, 23, of Waldorf, Maryland, and dumped his body on the tarmac.
Witnesses later identified Hamadi as having beaten the tied-up Stethem and the plane's flight engineer later testified at the 1989 trial that Hamadi bragged he had killed the diver.
Stethem's parents later sued Iran in US federal courts, saying that Iran had given support to the hijackers, believed to be from the Hizb Allah group.
German federal officials declined to comment extensively and said the case was a matter for state authorities.
The hijacked TWA plane on Beirut
airport's tarmac in June 1985
Stethem, 23, was severely beaten during the hijacking and shot on 15 June, while the plane was in Beirut.
Stethem was the only fatality during the ordeal, in which 39 Americans were held hostage for 17 days.
He received the Bronze Star and Purple Heart decorations posthumously, and a US Navy guided missile destroyer is named in his honour.
Hamadi was arrested at the Frankfurt airport on 13 January 1987, when customs officials discovered liquid explosives in his luggage.
US authorities had requested his extradition so he could stand trial in the US, but the Germans, who have no death penalty, insisted on prosecuting Hamadi.