Israeli military chief draws fire for selling shares after soldiers' kidnap

The chief of staff of Israel's military was under pressure yesterday after a disclosure that he sold about £14,500 of stocks within three hours of the Hizbollah border raid that triggered the Lebanon conflict.

Dan Halutz, head of the Israel Defence Force (IDF), was reported by the Israeli newspaper, Maariv, to have instructed his investment manager on 12 July to sell his personal portfolio, just as senior military and political figures were discussing the military response to the raid, in which two soldiers were abducted.

There is no suggestion General Halutz did anything illegal and the newspaper quoted him responding to what he called the "malicious and tendentious" report that the sale could not be linked to the war. He said he had made the decision because of previous losses and added: "At the time I did not expect or think that there would be a war."

But the report added a new element to an already mounting post-war debate in the wake of the admission by Ehud Olmert, Israel's Prime Minister, that there had been "deficiencies" in the management of the war. General Halutz, the former commander of the air force, had been criticised earlier in the campaign for relying too heavily on aerial bombardment in Lebanon.

Collette Avital, a Labour member of the Knesset, told the Ynet news service: "There is a serious problem here in his priorities when the security of Israel hangs in the balance... The country burnt and all that interested him was his investment portfolio."

The IDF said: "The chief of staff works day and night to protect the lives of the citizens of the State of Israel and the soldiers of the IDF and any attempt to connect his private matters to the event of the kidnapped soldiers is absurd."

The row came as General Halutz told Army Radio that the withdrawal of Israeli troops from southern Lebanon would take about a week to 10 days to complete. An estimated 2,000 soldiers were withdrawn yesterday, though Israeli troops shot dead five Hizbollah guerrillas said to have advanced against them.

As soldiers and civilians in the Galilee panhandle which juts into southern Lebanon continued to acknowledge Israel had not won a clear victory against Hizbollah, in Kyriat Shmona, shops opened and buses began returning with residents who had fled south to escape Katyusha rockets.

The Foreign Minister, Tzipi Livni, told a meeting of activists in the dominant Kadima party that the international community had a responsibility to implement the UN Security Council decision aimed at keeping armed Hizbollah groups out of southern Lebanon.

Alison Touval, 49, originally from Southgate, north London, who has been a resident in a local kibbutz for the past 18 years, said there were a lot of unanswered questions. She said she hoped the peace would last 10 years until her sons had been through the army but she added: "It's not clear how the peace agreement will work and whether it's a peace."

Marat, 29, a Russian-born Israeli signalman returning from the border, said: "I don't think it was a victory. It seems that Hizbollah was left with the upper hand."

Unicef said relief workers were hastening to follow a stream of about 6,000 Lebanese refugees returning home. In the border village of Kila, the first signs of life could be seen as a few cars drove through the seemingly deserted streets and at least half a dozen yellow flags of the sort flown by Hizbollah fluttered above buildings.

Sam Echadif, the manager of a supermarket in Metulla, said he hoped "next time" the army would prepare a full-scale war to clear Hizbollah out of southern Lebanon completely. "No matter what the politicians say, we have lost," he said.