But Sheik Hassan Nasrallah, whose guerrillas fought Israeli forces for 18 years in southern Lebanon and has engaged in several previous prisoner exchanges with the Jewish state, said he did not base his conviction on facts but rather on calculations.

"My deduction is two words: 'dead and lost,' " he said in an interview on the local New TV station.

It was the first time Hizbullah so explicitly explained the possibilities of Arad's disappearance because finding him or news about him would have been a prize for the guerrillas.

Israel and Hizbullah have held sporadic negotiations through German mediators over a prisoner swap that would reveal Arad's fate, but Hizbullah has said it has been unable to find any traces of Arad.

"Regretfully if we had tangible information we would have achieved an important (swap) deal," he said referring to Israeli demands for news on Arad in return for additional exchange of Arab prisoners held by Israel.

Nasrallah recounted an incident in 1989 when Arad was able to escape from the guerrillas, saying he may have died in the mountainous countryside of southeastern Lebanon in an accident while fleeing. He speculated that no one had discovered his body.

Another theory discounting that he was still alive was that no group would continue to hold him for that long without making a financial or political demand, Nasrallah said. (AP)