The Israeli army said Thursday that it has transferred control over a portion of the Israel-Lebanon border to Lebanese and international troops for the first time in two decades.

Control of a small area of the border near the Israeli border town of Metulla was handed over on Wednesday, the army said.

At the time of the cease-fire two weeks ago, which ended 34 days of fighting between Israel and Hezbollah guerrillas, Israeli troops occupied a security zone nine miles inside of Lebanon.

Israeli soldiers still patrolled other parts of the border. The army did not say how many of its troops remained in Lebanon, but said it has evacuated more than two-thirds of the area south of the Litani river.

Meanwhile, Lebanon's prime minister said Thursday that a prisoner swap with Israel was being considered by his government but "nothing has materialized."

Fuad Saniora said Lebanon was "continuing the contacts" with Israel about a possible swap in which two Israeli soldiers would be released in exchange for all Lebanese detainees in Israeli prisons.

"The matter is being looked after," he told reporters in Stockholm. "There is nothing really that has materialized so this matter is going to be of considerable interest by the Lebanese government."

Israel has demanded the return of two soldiers, whose capture by Hezbollah guerrillas in a July 12 raid triggered 34 days of fighting.

Saniora said Lebanon was interested in seeing the return of all detainees, "in other words the abducted soldiers as well as the Lebanese detainees that have been in Israeli prisons for over 28 years."

"I hope the Israeli government will respond to the call of reason so that we can finish with this and everybody will return to his home," he said.

U.N. Secretary General Kofi Annan said Thursday that the time was ripe for normal relations between Israel and Lebanon.

"This is the opportunity to move things for normal relations between Israel and Lebanon, if Resolution 1701 is implemented in its entirety," Annan said, referring to the U.N. Security Council resolution that ended the war.

On Wednesday, however, Saniora refused to have any direct contact with Israel and said Lebanon would be the last Arab country to ever sign a peace deal with the Jewish state.

Nevertheless, Annan said "we need to implement 1701 and to capitalize on building relations between Israel and Lebanon" as well as its other Arab neighbors to "stabilize the region."

Israeli Prime Minister Ehud Olmert on Wednesday rejected demands from Annan to immediately lift the sea and air blockade of Lebanon and withdraw its forces once 5,000 international troops are deployed.

Olmert indicated Israel would only allow free movement after the full implementation of a U.N.-brokered cease-fire that calls for 15,000 Lebanese soldiers and 15,000 international troops to be deployed in southern Lebanon and for an arms embargo to be enforced on Hezbollah.

Annan also criticized Israel's use of cluster bombs, saying "we need to be severely careful during wars."

"I call for the protection of civilians and civilian infrastructure, which should not be used as targets," he said.

He said the United Nations had asked the Israelis to say where cluster bombs were used so that they could be cleaned up quickly.

Annan spoke with reporters following talks with Jordan's ruler, King Abdullah II, in a conference hall on the shores of the Dead Sea, the lowest point on Earth.

Annan arrived here Wednesday from the West Bank town of Ramallah on the fourth leg of a regional tour which has also taken him to Lebanon and Israel. He was scheduled to leave for Syria later Thursday.

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