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I believe Olmert and Peretz wanted to picture themselves as strong leaders and totally underestimated the Hizbollah power, whilst believing the Airforce Generals that they could bomb Hizbollah into oblivion.
Sharon had nothing to prove and he was the one instigating the prisoners swap in 2004. Something the Hizbollah counted on when they took the 2 Israeli soldiers as prisoners (on Lebanese soil, killing 6 other soldiers during the fight which followed the intrusion). But they, at their side, completely underestimated the new Israeli governments reaction.
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