The reasons why a broader war may be in the cards are not hard to fathom. Israel, facing what is a pincer operation by both Hamas in the occupied territories and the Hezbollah in Lebanon believes it is facing an existential threat.

This does not mean that either Hamas or Hezbollah, or their combination, would be in a position to defeat Israel militarily. However, both are capable of pursuing a low intensity war against Israel virtually forever. And that, like all low intensity wars, would aim at breaking the spirit of the enemy, persuading more and more Israelis that their homeland is not a place in which to have a normal life and raise children, and that their best bet is to head for safe havens elsewhere. Low intensity war is also bad for any nation's economy. People cannot think of long-term investments when the see missile raining on them. The effects of low intensity war on Israel are even more strongly felt because of the country's demographic disadvantage. Living under the threat of suicide attacks is hardly an encouragement for making babies.

At the opposite side of the fight, Hamas and Hezbollah are also facing existential threats, as they know that Israel is determined to destroy them as political organisations.

Israel has refused to recognise the Hamas-led government and has succeeded in organising what amounts to an international quarantine against it. If Hamas ends up by tearing up its own charter and recognising the legitimacy of Israel's existence, it would spell its own doom as a radical Islamist movement. If, on the other hand, it persists with its no compromise stance it will be seen by many Palestinians as responsible for all the hardship they now suffer. Hamas in government is quite different from Hamas as an independent movement.

As for Hezbollah almost all of its prestige, or whatever is left of it, is based on the myth that it defeated the Israelis and drove them out of occupied southern Lebanon. At the same time Hezbollah is the target of United Nations resolution 1559 that demands its dissolution as an armed group. Hezbollah without arms would become just another Lebanese political party, garnering around 20 per cent of the votes.

The Hezbollah faces another, perhaps bigger, problem: it must develop its policies within a broader strategy worked out by the Islamic Republic in Tehran and the Baa'thist government in Damascus. As a result, it cannot simply decide to defuse the situation in the hope of keeping its military organisation intact. Iran, coming under growing pressure on the nuclear issue, is desperately looking for a diversion. And what better diversion than a mini-war that could keep international attention focused on the Israel-Lebanon-Palestine triangle? Syria, for its part, could profit from a limited war, between Israel and Hezbollah, by pointing out that its own presence in Lebanon had been a stabilising force and that efforts to exclude it from the Lebanese scene have generated greater instability.

In a sense, therefore, what we are witnessing is the opening shots in a proxy war between the Islamic Republic and Syria on one side and Israel on the other. As for Lebanon, it is, as so many other times in the past, being used by rival regional and international powers as a battlefield in which the Lebanese people are regarded as collateral damage at best.

Everyone knows that the Lebanese government does not have the power to implement Resolution 1559 and disarm the Hezbollah. Everyone also knows that Lebanon is not yet strong enough to ward off pressure and intervention from outside powers, this time Syria and the Islamic Republic.

The big question is this: will the Islamic Republic and Syria allow Israel to destroy Hezbollah's war machine and disarm its militia?

If Tehran and Damascus sit back and watch while Israel dismantles their principal asset in Lebanon, would they not lose all credibility as sponsors of radical movements in the Middle East and beyond? Would President Mahmoud Ahamdinejad who has vowed to wipe Israel off the map start his presidency by sitting back and watch Israel wipe Hezbollah's militia off the Lebanese chessboard? And what would the Assad regime look like if it did nothing to prevent Hezbollah, the bastion of Syrian influence in Lebanon, being broken in the current round of fighting? To be sure, Syria still has some Maronite allies in Lebanon. But these allies are there because Hezbollah is there. Once Hezbollah is out of the equation as an armed group, watch for Michel Aoun and others running in all directions in search of new protectors.

The Irano-Syrian strategy, especially since Ahmadinejad's decision to make the destruction of the Jewish state a priority of his administration, would encourage those in Israel who insist that it should seize the current opportunity for breaking the Hezbollah's war machine even in the face of a broader war. In doing so Israel could claim that it was simply helping Lebanon implement Resolution 1559.

The stakes have been raised beyond anyone's expectation.

If Israel backs down now and ends its campaign without disarming the Hezbollah it would, in effect, hand Iran and Syria an unexpected victory. This would also spell the end of Lebanon's new democratic government and the return in force of Syrian and Iranian influence in Lebanon. At the other end of the spectrum in Palestine, such an Israeli retreat would give a badly hurt Hamas a second lease of life and greater vigour to pursue its radical strategy. If, on the other hand, Israel removes the Hezbollah from the Lebanese scene it would be the turn of the leaderships in Tehran and Damascus to come to terms with a major strategic setback that could encourage their internal enemies. What is certain is that this conflict will not end until one side wins and another side loses. The G-8 may try to postpone decision-time for a bit longer. But it is hard not to see that there are two visions of the Middle East, one backed by the United States and its allies, including Israel, the other promoted by Iran and Syria and their surrogates.

Since a synthesis of the two is not possible, even the G-8 may realise that they cannot prevent a broader regional war.