HOSTAGE CRISIS. Israel would consider deal for seized flier

Israeli officials say they would consider negotiating a swap of Arab prisoners for the release of an Israeli flier captured in Lebanon. However, Prime Minister Yitzhak Shamir denied Thursday that any secret negotiations have started. He was responding to reports from Lebanon and Israel that secret negotiations were under way that involved the release of 400 Arab prisoners held by Israel for the Israeli flier and four professors - three Americans and one Indian - held in Lebanon. Foreign Minstry and military sources also insisted the reports were premature.

Israel's apparent willingness to consider negotiating for the freedom of its navigator would seem to put it at odds with the United States' wishes. Secretary of Stage George Shultz said Wednesday that the US opposes releasing prisoners held in Israel to gain the release of either Americans or Israelis in Lebanon.

But such objections will carry little weight with Israeli officials if it appears possible for Israel to get back its navigator, Israeli analysts say.

Despite rising opposition in the US and Israel to prisoner exchanges, senior Israeli leaders are committed to the principle that virtually no price is too high to win the freedom of Israeli soldiers. Mr. Shamir, Foreign Minister Shimon Peres, and Defense Minister Yitzhak Rabin have repeatedly said they are interested in negotiating for the return of Israeli soldiers ``through proper channels.'' Israel would also like to win freedom for two other Israeli soldiers believed held by the pro-Iranian group Hizbullah.

The apparent determination to deal is meeting mounting public resistance here. In 1985, the release of 1,150 Palestinians convicted of crimes was condemned across the political spectrum, although the Cabinet voted unanimously for it.

This week's reports that another mass exchange might be in the works provoked some 20 demonstrators to storm Israel's Supreme Court Wednesday and Thursday. The demonstrators were people who had themselves been wounded or lost relatives in terrorist attacks. They demanded a Supreme Court injunction preventing the government from releasing more prisoners. The court refused.

The demonstration and Shultz's forceful comments indicate a growing sense both in Israel and in US that the price paid for hostages is too high, analysts say. ``I don't think it is necessarily the principle of an exchange that is the problem,'' said an Israeli who has worked on past prisoner exchanges. ``There is just a sense that the price has been too high and that this time the price must be lower.''

Even if contacts were already under way, analysts say, the process could take months to complete. The immediate problem posed by Shiite Amal leader Nabih Berri's offer of a three-way trade is that his group is in competition with the people Israel believes are holding the four professors. Amal is battling politically and militarily for control of the Shiite community with Hizbullah. The Israelis believe either Hizbullah or a group linked to it holds the four hostages.

Berri offered to exchange the Israeli navigator for 310 Lebanese and 90 Palestinians, including three convicted this week of a grenade attack on Israelis in Jerusalem. Berri said that the group holding the four hostages would have to release them before the Israeli-for-Arabs exchange could take place. A group calling itself the Islamic Jihad for the Liberation of Palestine claims to hold the lecturers and had threatened to kill them unless Israel released 400 prisoners.

Rabin has said Israel will not respond to captors' demands unless formally approached by the US. Shultz's comments make such an approach unlikely.

Israeli sources who have participated in past exchanges stress any swap will take place only after complex negotiations pursued under the auspices of the International Committee of the Red Cross. Israel has negotiated several large-scale prisoner exchanges through the ICRC, including the 1983 exchange of 4,500 prisoners and more than 100 Palestine Liberation Organization members for six Israeli soldiers held by the PLO.

Israeli sources confirm that Israel made contacts through intermediaries in mid-January, offering to negotiate a prisoner exchange that would trade Lebanese held by Israel's proxy militia, the South Lebanon Army, for the two Israeli soldiers captured by Hizbullah. Israel forces swept through south Lebanese villages immediately after the soldiers were captured last year. The Israelis, who said they were searching for their missing soldiers, also rounded up an estimated 200 Lebanese Shiites in the sweep.

Israeli military sources acknowledge that some 200 to 250 Lebanese and Palestinians are held by the SLA in its prison camp at Khiam, inside Israel's so-called ``security zone'' in south Lebanon. They insist that no other Lebanese are held in Israel. Israel is holding several Palestinians believed to be senior members of the PLO's Al-Fatah faction.