Man alleged to have senior role in Basque group is caught in French-Spanish raid.
He said he believes talks with the government could help end the separatist conflict in northern Spain.
Otegi, 50, also called for the release of all Basque separatist prisoners.
He was imprisoned in July 2007, after the supreme court upheld his sentence for “glorifying terrorism” after he praised Jose Miguel Benaran Ordenana, Eta’s veteran leader, at a memorial service in 2003.
At the time, Batasuna called Otegi’s arrest an act of “maximum gravity” and accused the government of Jose Luis Rodriguez Zapatero, the Spanish prime minister, of silencing the pro-independence movement’s chief representative.
His detention came just days after Eta formally called off a ceasefire with Spain’s socialist government announced in March 2006, citing a lack of progress in its subsequent peace talks with Madrid.
Zapatero’s government reiterated on Saturday that there would be no new peace talks with Eta, which has killed 823 people in its 40-year campaign for an independent Basque homeland.
“There is no possibility of resuming dialogue. All the doors are closed and the only possibility which leftist Basque nationalists have is to convince the Eta terrorist group to lay down its weapons,” Jose Blanco, the deputy leader of the Socialist Party, said.
Eta has been blamed for four deaths since it formally called off its ceasefire in June 2007.
Batasuna has been banned as a party since 2003 for refusing to condemn violence and sever its links to Eta, which is considered a “terrorist” organisation by the European Union and the United States.
Florencio Dominguez, an Eta expert and the editor-in-chief of Vasco Press, a Basque news agency, said Otegi “would not have the same political weight” as before given the failure of Eta’s peace talks with the government which he had strongly supported.
Spanish press said it was unlikely that Otegi, who had been Batasuna’s chief spokesman, would resume a prominent role.
The daily El Pais quoted Basque “nationalist” sources as saying Otegi would not go back into active politics.
While serving his sentence Ortegi reportedly kept a low profile, spending his time learning English and only having rare visits from political figures.
Otegi faces another trial over Batasuna’s links to Eta and other terrorism-related charges, ranging from participating in illegal political meetings, which could see him sentenced to 14 years in jail.