In return, Switzerland would offer diplomatic support to the PLO.
It followed a series of attacks in 1969 and 1970 by Palestinian groups that caused huge concern in Switzerland.
In February 1969 gunmen opened fire at Zurich airport on an El Al plane, whose pilot died in the attack. The Swiss arrested the attackers
In 1970, a bomb on board a Swissair flight to Tel Aviv brought the plane down just outside Zurich, killing all 47 passengers and crew
In September 1970, a Swissair flight on its way to New York was hijacked. Two other airlines, one British, one American, were hijacked at the same time. All three ended up at Dawson`s Field airstrip in Jordan, where more than 300 passengers were held hostage
Now, in a book by Swiss journalist Marcel Gyr, information has emerged indicating that, in the stressful days and nights while Switzerland tried to get its hostages released, Swiss Foreign Minister Pierre Graber secretly contacted the PLO.
Using a member of the Swiss parliament as an intermediary, but without informing his fellow government ministers, Mr Graber, the new revelations suggest, came to an agreement under which those charged for the attack on the El Al plane would be released in return for freeing the hostages.
In addition the investigation into the bombing of the Swissair flight would be quietly shelved, and Switzerland would use its diplomatic offices to push for international recognition of the PLO.
After 1970, while there were further Palestinian terror attacks in other European countries, there were none in Switzerland.
Classified papers
Many of the documents relating to the events of 1970 are still classified under Swiss law but the revelations have started a big debate in Switzerland over the circumstances, if any, under which governments should consider negotiating with terrorist groups.
Almost half a century later, with many countries experiencing terror attacks, it seems outrageous to some Swiss that their own government might have done deals with groups classed as terrorists.
What is more, the relatives of those who died in the bombing of the Swissair flight may be justified in feeling angry that no one has ever been brought to justice, especially as Swiss investigators had identified a Jordanian national as the mastermind behind the attack.
In the wake of the revelations, Switzerland`s current Foreign Minister, Didier Burkhalter, has said he knew nothing of the secret deal and admitted he was very surprised.
Nevertheless, some Swiss politicians are calling for an official parliamentary inquiry to establish exactly what happened.
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