AS reports persist about a possible large-scale release of Western hostages held in Lebanon and other captives in the region, a radical Palestinian leader insists that some 18,000 Palestinians held in Israeli jails must be part of the equation.Ahmed Jabril, in an interview Wednesday at the Damascus headquarters of his organization, the radical Palestinian Front for the Liberation of Palestine - General Command (PFLP-GC), also says he can confirm that Israeli Air Force navigator Ron Arad, missing in Lebanon since 1986, is alive. Mr. Jabril was involved in a 1985 swap of three captured Israelis held by the PFLP-GC for 1,187 Palestinians held in Israeli jails, and appears to have had some contact with parties in the current discussions about the release of hostages. He conferred with Iranian Interior Minister Abdullah Nouri in Damascus late last week and says he has talked with Hizbullah members in Lebanon. The radical Shiite Hizbullah group is believed to control at least two of the Western hostages. Jabril says he has conducted taped interviews with Mr. Arad. "I myself had lengthy discussions with the Israeli, about the Old Testament, political affairs, and ideology," Jabril says. He says two other Israelis are alive but refused to name them. Aside from Arad, there are six other Israeli servicemen missing. Yossi Fink and Rahamim Alsheikh were wounded and captured in a 1986 ambush in Lebanon. Three soldiers, Zvi Feldman, Zachary Baumel, and Yehuda Katz were captured in Lebanon's Bekaa valley by Syrian troops in a tank battle during the 1982 Israeli invasion. They were later paraded through the streets of Damascus aboard their tank. The remains of the seventh man, a Druze Israeli soldier, are reportedly held by a Damascus-based Palestinian radi cal group, the Democratic Front for the Liberation of Palestine. Jabril appeared eager to publicize any role which he and his group may have in a deal to free Western hostages and the Israelis. But he is also attempting to redefine the terms of any broad program of releases for captives. He says the first part of a two-phase plan must concern "civilians:" the exchange of the Western hostages in Lebanon for some 18,000 Palestinians jailed in Israel. (Israel's stance, Page 7.) Then, he says, the Israeli servicemen can be traded for Palestinian and Lebanese soldiers held by an Israeli-backed militia in southern Lebanon. He is calling on the Israelis to make a "distinction" between civilian and military captives. Israel is demanding the return of its missing soldiers before releasing Arab prisoners it holds. Of the seven listed by Israeli officials, only one was previously believed alive.