"Quite simply, Lebanon has become a house divided," Lebanon's Daily Star newspaper said on Thursday in an article about last summer’s war between Israel and Hezbollah, which Lebanon marked while facing a deep political and economic crisis as well as a deadly standoff between the army and rebels holed up in a Palestinian refugee camp in the north.

Exactly a year ago, on July 12 2006, Hezbollah fighters captured two Israeli soldiers and killed another six in a cross-border raid. Israel used the incident as an excuse to launch a deadly air, sea and land assault on Lebanon that claimed the lives of more than 1,200 mostly Lebanese civilians, displaced one million people and left the country’s infrastructure in tatters.

The Israeli army also lost 116 soldiers, and 43 civilians who were killed by more than 4,000 Hezbollah rocket attacks.

A UN-brokered ceasefire ended the 34-day conflict in August, with Hezbollah leader Sheikh Hassan Nasrallah declaring a strategic victory over Israel, whose failure to retrieve the two captured soldiers, crush Hezbollah or halt its daily cross-border rocket attacks led the Israelis to view the war as a failure.

Despite public perception that Hezbollah won the war, no special events marked the first anniversary of the deadly conflict in Lebanon, even in the south, which bore the brunt of Israel’s offensive. Lebanon’s As-Safir daily tried to explain why the Lebanese were reluctant to hold any special events to mark the war; "One year has passed since the Israeli war on Lebanon, but it was full of dangerous developments that make us fear from our 'victory' (over Israel) and cancel celebrations in order to avoid discord," it said.

In fact, the recent developments in Lebanon are devastating. On Wednesday, Prime Minister Fuad Siniora urged Lebanese to unite behind the army, seen as a unifying factor, and heal their political divisions which started after the 2005 assassination of former Prime Minister Rafiq Hariri in a bomb blast that led to the Syrian withdrawal from Lebanon and was followed by a series of attacks targeting prominent anti-Syrian figures.

Tensions escalated between the Western-backed Siniora government and the Hezbollah-led opposition, who have been stuck in an eight-month standoff over power-sharing and a UN tribunal aimed at trying suspects in the Hariri murder; viewed by the opposition as a political tool in the hands of Western powers. There are now fears that the turmoil could worsen in the run-up to a September deadline for electing a new president.

As Siniora deals with the aftermath of last summer’s war, he is also challenged by rebels holed up in the Nahr el-Bared refugee camp, who have been engaged in fierce fighting with Lebanese troops since May 20. More than 177 people, including 89 Lebanese soldiers and about 89 rebels, have been killed in what’s being described as Lebanon’s worst violence since the 15-year civil war which ended in 1990.

The economic fallout from last summer’s war has also been enormous.

Tourists and foreign investors preferred to stay away from Lebanon for a second straight year in 2006, and the economy shrank by five percent.

Material damage of Israel’s bombardment was estimated at 3.6 billion dollars, excluding lost revenues. Across Lebanon, approximately 125,000 houses were destroyed by Israeli bombardment - much criticized at the time as disproportionate. Of the one million people displaced in Lebanon, an estimated 200,000 have still not been able to return home.

Much of the battered infrastructure has been restored, as billions of dollars in foreign aid flowed in, with projects spearheaded and paid for by the government in Beirut, and in the south by Iran. But the reconstruction of homes has been slow. Saudi Arabia has pledged to rebuild a number of villages in southern Lebanon, but so far most of the owners of bombed homes have only received half of a promised $40,000.

"The Saudis have given the money, but it is sitting in banks in Beirut," says one resident. "The government is meant to disburse the money, but they send engineers who say they need to check some detail, and then they leave and don't come back."

Most residents in the south believe that the government is withholding the money in an attempt to pressure Hezbollah to disarm. Muhammad Milhim, 77, whose house in the southern village of Qabrikha has been completely destroyed, says the government must take responsibility for this rebuilding. “We are poor people. Why should we suffer because political parties are squabbling for power in Beirut.”

In several southern villages, residents receive money from Hezbollah (meant for to pay for rent and furniture, provided by Iran) to refurbish their homes. Many villagers there say they need Hezbollah fighters in the area. "We need Hezbollah to protect us...Without Hezbollah and Qatar [which has pledged to fund reconstruction] there would be no-one left in this village,” says Ahmed Srour, a resident of the Aita Shaab village.

Israel too paid a heavy price. It’s still coping with the aftermath of the conflict that has weakened the government. Prime Minister Ehud Olmert, accused of "severe failures" in an interim report by the Winograd Commission, will probably face new resignation calls when the panel releases its full report in August.

Despite the crescendo of criticism, Olmert refuses to step down, strongly defending his actions during the conflict, which Israel now calls the Second Lebanon War. On a tour of border areas on Thursday, he said: "I am convinced, as I was 12 months ago, that we took the right decision as we had to once and for all push away the threat from the border.”

As both Lebanon and Israel grapple with the war's consequences, human rights groups spoke of war crimes committed during the conflict.

"Both sides in this conflict violated the laws of war, but a full year later, no one has been held accountable," Human Rights Watch's Middle East director Sarah Leah Whitson said.

Meanwhile, Amnesty International slammed Israel for bombing civilian areas and using cluster bombs, and lamented a "complete absence of any steps in the two countries affected or internationally to prosecute those responsible for war crimes and other grave violations committed" during the war, warning that without a “full, impartial UN-led inquiry that includes provision for reparations to the victims, there is a real danger of history repeating itself.”

The UN Children’s Fund (UNICEF) also released a report today in which it said that Lebanese children are under the psychological impact of the war. "The capacity of Lebanese children to recover and move forward is seriously compromised by the continued threat of political and security instability in this country... We must remember that these children still have invisible scars. Emotional recovery takes more time than building a bridge and, in a country under a chronic crisis, this will be a long range process,” said Robert Laurenti, UNICEF representative.

PHOTO CAPTION

An Israeli soldier on a tank at the Lebanese border on 7 August 2006

Aljazeera