In an interview with Army Radio, Amir Peretz acknowledged Hezbollah's demand that Israel free Samir al-Qantar as part of any deal over the two soldiers seized in a cross-border raid on July 12.
"The question of Qantar remains on the agenda in every incident involving Hezbollah," Peretz said, referring to previous prisoner exchanges with the group.
"The question of Qantar will also now remain on the agenda. We intend to examine the issues as they come up," he added.
In 2004, Hezbollah and Israel exchanged the bodies of three Israeli soldiers captured in 2000 and a kidnapped Israeli businessman for 400 Palestinian and 23 Lebanese and Arab prisoners in a Germany-brokered deal.
A second possible deal involving al-Qantar was discussed at the time. Israel said that it might release him in exchange for information about the fate of Ron Arad, an Israeli airman whose plane was shot down over Lebanon in 1986.
An Israeli court sentenced al-Qantar to 542 years in prison in 1980 for his part in the killings of an Israeli, his daughter and a policeman. He was only 16-years old when he broke into an apartment in the coastal city of Nahariya with three other gunmen and snatched Danny Haran and four-year-old Einat.
Peretz acknowledged Hezbollah's
demand that al-Qantar be freed
Witnesses said the gunmen took the father and daughter to a nearby beach, where al-Qantar shot Haran dead and then smashed the girl's head against a rock with his rifle butt. Haran's wife Smadar smothered their other daughter to death while trying to prevent her from crying out as they hid in a closet.
Two of the gunmen were killed in the attack. A third was released in a prisoner swap with a Palestinian group in 1985.