Colombian President Alvaro Uribe on Friday announced the creation of a demilitarized "meeting zone" and US$100 million in rewards to spur talks on a hostage-swap with Marxist FARC rebels.
The announcement reversed Uribe's opposition to setting up such a zone, one of the rebels' key demands, and comes after a news agency close to the rebels praised moves by French President Nicolas Sarkozy to win the hostages' release.
"The Catholic Church proposed to set up this meeting zone and the government has shown its willingness to accept it," Uribe said at a police ceremony in the capital, Bogota.
The "meeting zone" would spread over 150km2 and should be unpopulated or only sparsely populated, Uribe said. International observers will be present to oversee the humanitarian exchange, he said.
Uribe also announced that his government had set aside US$100 million to pay rewards to guerrillas who hand over their hostages.
The Revolutionary Armed Forces of Colombia, the country's largest insurgent group, has been seeking to swap some 45 high-profile "political" hostages they are holding for 500 of their imprisoned comrades.
The hostages include French-Colombian politician Ingrid Betancourt, captured in February 2002, and three US contractors captured one year later when their plane was shot down as they carried out drug surveillance.
Sarkozy on Wednesday directly called on insurgent leader Manuel Marulanda to release Betancourt and the other hostages.
Betancourt, seized when she was campaigning for Colombia's presidency in 2002, was seen for the first time in years last week when videos and letters captured from the rebels were released to the press.
The video, dating from October, showed Betancourt looking thin and dispirited. Friends and family however hailed the proof that she was still alive, and the video helped revitalize the campaign to win her freedom.
Venezuela's President Hugo Chavez had initially mediated in the efforts to achieve a prisoner swap, but Uribe angrily dropped him from that role last month, saying Chavez ignored his demand not to speak directly with Colombian generals about the hostages.
Piedad Cordoba, an opposition Colombian senator who helped facilitate Chavez's original mediating role, said on Friday that the Venezuelan president was willing to forget the past if he could help.
Chavez told her "that if in any moment his presence was required by president Uribe, to help with the humanitarian exchange, he would forget the things that have happened and would be ready to contribute," Cordoba told reporters.
Betancourt's mother Yolanda Pulecio said that Uribe's announcement was "positive," especially because it would be the FARC that would choose the site.
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