Despite concerns expressed by UN Secretary- General Kofi Annan, Hizbollah said it has right to mine Israeli border. Israeli jets continued to violate Lebanese airspace. Following January prisoner exchange with Israel, new swap expected in coming months. Talks to focus on fate of missing Israeli pilot Ron Arad.

Following years of negotiation, German-mediated prisoner exchange between Israel and Hezbollah took place 29 January. Deal saw Israel release 23 Lebanese, 400 Palestinian, and 12 other Arab prisoners in exchange for Israeli businessman and bodies of 3 soldiers. Agreement reached despite violence along Lebanese border and tensions between Israel and Syria, Hizbollah’s main backer. On 19 January Hizbollah guerrillas fired anti-tank missile at IDF bulldozer which had crossed several meters into Lebanese territory, killing Israeli soldier. Israeli warplanes struck Hizbollah positions in southern Lebanon following day.

Israeli troops shot and killed 2 Lebanese men carrying hunting rifles along border with Israel 9 December. Lebanese security forces arrested 2 citizens suspected of planning to bomb U.S. embassy in Beirut.

Negotiations ongoing between Hizbollah, Israel, and German mediators over possible prisoner swap. Deal would see about 20 Lebanese prisoners and some 400 Palestinians freed in exchange for Israeli businessman and bodies of three soldiers, but Hizbollah insisting on release of Samir Kantar, Lebanese man imprisoned for killing Israeli family in 1979.

Israeli soldier killed 7 October in clash on Lebanese border amid heightened regional tensions after Israeli raid on Syria days earlier. Second exchange of fire 27 October as Hizbollah guerrillas attacked Israeli positions in Shebaa Farms and Israel responded with air strikes.

Israeli jets attacked suspected Hizbollah gun position in southern Lebanon on 3 September. Raid was first since 10 August, when shells fired by Hizbollah killed one Israeli and wounded five others, breaking period of calm along border. Incident between Lebanese army and Hizbollah guerrillas left one guerrilla dead after troops intervened in dispute between Hizbollah and rival Shiite party. Government on defensive after ordering banks to reveal accounts of Hamas members whose assets U.S. wants frozen. Prisoner swap between Hizbollah and Israel appears likely.

Hizbollah fired shells into Israel on 10 August killing one person and wounding 5 others; attack came in wake of killing of Hizbollah leader in Beirut and days after group exchanged artillery fire with Israel for first time in 8 months. Violence erupted despite signs that Hizbollah being forced to rein in military activities because of intense U.S. pressure on Syria and Iran, group’s main backers. More anti-aircraft rounds fired on 31 August when Israeli planes entered Lebanese airspace.