Israel Prime Minister Ariel Sharon said in remarks published Wednesday that a large-scale swap of prisoners with Lebanese guerrillas is closer than ever, but will still require the approval of the Israeli Cabinet.

Sharon also said Israel will not release Palestinian uprising leader Marwan Barghouti (search) in the emerging deal with Hezbollah, and that Israel will insist on DNA testing of three bodies of Israeli soldiers that are to be handed over.

Any of the issues raised by Sharon in an interview with the Maariv daily could hold up or torpedo the German-brokered deal. Cabinet approval is not assured and Barghouti's attorney has said the Palestinian leader, considered a possible successor to Yasser Arafat, tops Hezbollah's list of prisoners it wants freed.

In the Gaza Strip, meanwhile, a 16-year-old Palestinian was killed early Wednesday in a gunbattle between Palestinians and Israeli troops searching for weapons-smuggling tunnels along the Gaza-Egypt border.

The firefight erupted when 20 Israeli tanks and armored bulldozers entered the Rafah refugee camp. Mohammed Hamdan, 16, a helper of the gunmen, was killed in the gunbattle, hospital officials said, and more than a dozen Palestinians were wounded. Palestinian witnesses said troops razed two houses.

Sharon's remarks in Maariv marked the first time the prime minister has spoken publicly on a possible prisoner exchange.

Sharon said negotiations have gone further than ever before. "We are closer than before (to a deal), but it's still far from being finished," he told Maariv.

In the emerging swap, Israel would release several hundred prisoners, including Lebanese guerrilla leaders Abdel Karim Obeid (search) and Mustafa Dirani, in exchange for ailing Israeli businessman Elhanan Tannenbaum (search) and the bodies of three soldiers kidnapped by Hezbollah in 2000.

Israel had seized Obeid and Dirani in 1989 and 1994, respectively, as bargaining chips for the release of Israeli airman Ron Arad (search) who was shot down over Lebanon in 1986 and is believed by Israel to be held by Iran.

Sharon said he is certain Tannenbaum is alive, but that his health is deteriorating, and suggested Israel can't wait much longer to win his freedom.

He said he would seek Cabinet approval for what he said would be a complex decision. "Let there be not one minister who is not part of the discussion," Sharon said. "I want the ministers to be personally responsible for this decision."

Ministers would be forced to choose between two maxims — bringing home captives at any price and not freeing those involved in deadly attacks on Israelis. The deal would likely be lopsided, leading to the release of several hundred Arab prisoners in exchange for one Israeli captive.

Israel has agreed to such a ratio in the past, including in 1985 when three Israeli POWs were traded for 1,150 Palestinian prisoners.

Palestinian sources say Israel has agreed in principle to release imprisoned leaders of militant groups and those with life sentences.

However, Sharon said that Barghouti "cannot be a condition for this deal," adding that "Barghouti is responsible for acts of murder, and he is going to prison."

Palestinian sources insisted Barghouti would be among those freed, despite Israel's public denials.

Barghouti is on trial for alleged involvement in attacks that killed 26 Israelis. Barghouti, a Palestinian legislator, insists Israel has no right to try him since he was abducted from the West Bank.

An Israeli security official, speaking on condition of anonymity, said about 300 prisoners would be freed.