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The 50-year-old general and deputy Chief of Staff at Nato's Southern European land forces headquarters at Verona, emerged after 42 days in captivity unharmed, but thinner and with a beard.
Police had been watching the flat in Padua for three days. The decision was taken to go in this morning at 1136 local time.
A squad of specially-trained officers broke down the door of the five-room apartment and confronted the five terrorists, including a woman, who surrendered immediately.
Posing as plumbers
The general was gagged, barefoot and wearing a tracksuit. He was inside a tent. One of the terrorists, who was standing pointing a gun at the general's head, was quickly overpowered.
The general's first words are reported to have been: "Thanks, thanks, marvellous, ok, police."
He was allowed to telephone his wife, who is in West Germany and the US Ambassador in Rome before being taken to an American military base near Verona.
His Red Brigade kidnappers are said to include the Venice leader, Antonio Savasta, and his partner, Emilia Libera. A third suspect was identified as Cesare Leonardo. The other two remain unidentified.
The left-wing Red Brigade was set up in the 1970s following the failure of the New Left government.
It has sought to highlight its cause by kidnapping and murdering prominent Italian politicians and other senior figures, including former prime minister Aldo Moro in 1978.
Police seized a number of guns, hand grenades, explosives and ammunition from the flat.
The general's wife, Judith, and 24-year-old daughter Cheryl, are being flown from West Germany to be reunited with him.
US President Ronald Reagan has hailed the general as a "courageous soldier whose life has been dedicated to the defence of liberty" and said his rescue was "a happy ending, the prayers of millions of Americans have been answered."
The general was captured in December. Members of the Red Brigade posing as plumbers called at his flat on the sixth floor of an apartment block in Verona.
He tried to fight off the intruders, but was hit on the head with a pistol and forced into a trunk, which was loaded into the boot of a car.
He was the first foreigner to be captured by the Red Brigade. There were rumours a ransom had been demanded of up to £4.5m.
A week later Brigadier General James Dozier was flown back to the United States, where he received a hero's welcome.
At his first news conference after his release, General Dozier admitted he had been warned about the possibility of a kidnap attempt but he had been "too busy" to take any notice of the threats.
During his captivitiy he described how he had been chained by his left foot and right hand to the central pole of a small tent, within the flat in Padua. He said his captors treated him with "businesslike indifference" but they kept their faces covered so he could not identify them.
The general said he was also forced to wear earplugs or listen to loud music on earphones for seven or eight hours a day. He complained at first he was given only rock music and so he was allowed some classical, but his hearing was permanently damaged.
The general's kidnappers subsquently informed on other members of the Red Brigade. It led to a number of arrests and in early 1983 59 members of the group stood trial for the murder of Aldo Moro and 16 others. At least two of them received life sentences.
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