This report analyzes the current conflict between Israel and two U.S. State Department-designated Foreign Terrorist Organizations (FTOs), the Lebanese Shiite Muslim group Hezbollah and the radical Palestinian Hamas organization. On July 12, 2006, what had been a localized conflict between Israel and Palestinian militants in the Gaza Strip instantly became a regional conflagration after Hezbollah captured two Israeli soldiers in a surprise attack along the Israeli-Lebanese border. Israel has responded by carrying out air strikes against suspected Hezbollah targets in Lebanon, and Hezbollah has countered with rocket attacks against cities and towns in northern Israel. Fighting on the ground has also started. Meanwhile, Israeli clashes with Hamas and other Palestinian militants have continued unabated in the Gaza Strip. The Bush Administration has repeatedly stated its unequivocal support for Israel during this time of crisis, and President Bush has charged that "the root cause of the problem is Hezbollah ... An part of those terrorist attacks are inspired by nation states, like Syria and Iran." Many in the international community have called for an immediate cease-fire, while U.S. officials refrained from backing this demand or engaging in immediate shuttle diplomacy while Israel conducts its extensive military campaign to weaken Hezbollah. On July 18, 2006, the Senate passed S. Res. 534, which, among other things, calls for the release of Israeli soldiers who are being held captive by Hezbollah or Hamas; condemns the governments of Iran and Syria for their continued support for Hezbollah and Hamas; urges all sides to protect innocent civilian life and infrastructure; and strongly supports the use of all diplomatic means available to free the captured Israeli soldiers. On July 20, 2006, the House passed H. Res. 921, which also condemns Hezbollah's attack on Israel and urges the President to bring sanctions against the governments of Syria and Iran for their alleged sponsorship of Hezbollah. H.Con.Res. 450 (introduced in the House) calls upon the President to appeal to all sides in the current crisis in the Middle East for an immediate cessation of violence and, among other things, commit United States diplomats to multi-party negotiations with no preconditions. The extension of the Israeli-Palestinian conflict into the Lebanese arena has created a multifaceted crisis which cuts across a number of U.S. policy issues in the Middle East. This report not only discusses the current military situation, but tis implications for regional stability, Syrian influence in Lebanon and calls for Lebanese independence, Iranian regional aspirations and its pursuit of weapons of mass destruction, and energy security.

"July 21, 2006."