Paper: German Intelligence Seeks Release of Israeli Hostages

The two countries' intelligence agencies are also reported to be have been working for weeks on the securing the release of a third solider in Gaza, according to Friday's Berliner Zeitung.

German Foreign Minister Frank-Walter Steinmeier and Russian Foreign Minister Sergei Lavrov originally set up the operation to free the solider in Gaza at the end of last month, then extended the action to include the two other soldiers captured by Hezbollah on July 12, the paper claimed, citing anonymous sources.

Hezbollah's kidnapping of the two soldiers is the main reason behind the Israel's week-long bombing campaign in Lebanon that has killed more than 300 people. The Israeli government has made the soldiers' release a condition for ceasefire talks.

Mixed messages on prisoner exchange

Rocket attacks fired by the guerilla group have killed 29 people in Israel. Hezbollah has said it is seeking a prisoner exchange with Israel, which was met with mixed messages from Israeli officials.

Foreign Minister Tzipi Livni said Israel would only accept the soldiers' unconditional release while Public Security Minister Avi Dichter said Tuesday that Israel may have to consider setting some of its prisoners free, possibly with Germany working to secure a deal between the parties.

German history of Middle East mediation

Though not in their current roles as German Foreign Minister and Federal Intelligence Agency (BND) head, Steinmeier and Ernst Uhrlau were both closely involved in the 2004 exchange that saw Israel release hundreds of Arab prisoners in exchange for Hezbollah handing over a kidnapped Israeli businessman and the bodies of three soldiers.

Germany's role as a mediator in the Middle East dates back to the 1980s when then-Chancellor Helmut Kohl was requested to become involved in organizing the release of a pilot show down in Lebanon.

The German intelligence agency is also known to have mediated between Israel and Hezbollah and Hamas in the past, though never on a stage of this size.

"I would be very careful. What the BND did before was dealing with a very limited issue -- in scope, in time and in task," an unnamed German government source told Reuters earlier this week. "Here we have now an armed conflict, a major operation that goes well beyond the scope of previous actions."

Spokespeople for both the German foreign ministry and BND would not officially comment on whether their departments would take a position in the current situation in the Middle East.