If the Special Tribunal for Lebanon indicts several Hizbullah members, the Shiite group could use an escalation against Israel to divert the political storm, the Israeli newspaper Haaretz wrote.

It said it is not clear in which direction Lebanon is heading: Is it a country on the verge of collapse? Is it heading toward a civil war? A war against Israel? Or is it just facing another political crisis that too will pass?

Israeli Defense Minister Ehud Barak has said the Special Tribunal for Lebanon was a Lebanese and international issue, adding the Jewish state would not interfere in any crisis resulting from it.

“We are monitoring the developments taking place over the international tribunal,” Barak said in New York on Thursday. “It is not Israel’s business to interfere in this conflict and what could result from it.”

The Middle East peace process lay in tatters Wednesday after Washington admitted defeat in its efforts to secure an Israeli freeze on settlement building, the Palestinians' condition for resuming talks.

Speaking late on Tuesday, U.S. officials admitted top-level efforts to coax Israel into imposing new curbs on West Bank settlement construction had gone nowhere, prompting Palestinian president Mahmoud Abbas to declare a crisis in peace efforts but backslapping among Israeli hardliners.

Israel carried out two air raids on the Gaza Strip early Wednesday without causing any casualties, Palestinian security officials said.

The attacks came after Palestinian militants fired two projectiles into southern Israel from the Hamas-ruled Gaza Strip on Tuesday.

Israeli Minister Yossi Peled has promised Ghajar residents there will be no physical partition in the village despite Israel's decision to withdraw from its northern part.

His promise was made during a meeting with head of the Ghajar council, Ahmed Fatali, and village representatives on Tuesday.

Lebanon filed a complaint with the U.N. Security Council on Saturday over an Israeli device found in south Lebanon to spy on Hizbullah’s private telecommunications network.

Hizbullah said Friday that it discovered the device which exploded after apparently being detonated remotely by the Israelis near the village of Majdel Selem, about 8 kilometers from the border with Israel.

Syria's alleged interference in Lebanon and its increasingly sophisticated weapons shipments to Hizbullah have alarmed U.S. officials and prompted Israel's military to consider a strike against a Syrian arms depot, U.S. and Israeli officials told The Washington Post.

But Israel has so far hesitated to take military action out of concern that such a strike could touch off a conflict even bloodier than the 2006 war, said an Israeli military official.

Israeli forces killed several armed Palestinians planning a "terror attack" as they approached the northern border fence of the Gaza Strip, the military said on Thursday.

"IDF (Israel Defense Forces) thwarts terror attack in northern Gaza," a statement from the military said.

Five Palestinians were injured Tuesday by Israeli gunfire while scrounging for construction material in the rubble near Gaza's northern border with Israel, Palestinian medics said.

The Israeli military said it had opened fire on three Palestinians approaching the border fence after they failed to respond to warning shots.

Israeli helicopter gunships fired missiles at a building near the southern Gaza Strip city of Khan Younis on Thursday, targeting suspected militants, the military said.

Witnesses said the strikes hit a multi-storey building and that tanks also opened fire shortly afterwards. Palestinian medical sources said there were no casualties and that a group of people inside the building were able to escape.