JERUSALEM (Reuters) - Five days of fighting have given Israel pause to reevaluate the strength of one of its most hardened enemies -- Hizbollah.
Since Wednesday, the Lebanese guerrilla group has killed 12 Israeli troops, captured two others, rained missiles down on northern Israel, killing at least 12 civilians, and badly damaged a navy ship, sending it back to port.
Hizbollah's leader, Sayyed Hassan Nasrallah, has appeared on television threatening all-out war and pledging to target major Israeli infrastructure such as petrochemicals plants.
Just as Lebanon's economy has been shattered by Israel's aerial bombardment and coastal siege in recent days, Israel's stock market has been hit by one of the worst Middle East crises in decades, falling 11 percent in three sessions.
"The idea that Hizbollah is some sort of rag-tag militia with AK-47s and a few RPGs is simply ridiculous," Israeli Foreign Ministry spokesman Mark Regev said on Sunday.
"What we saw this morning in Haifa demonstrates that it is a formidable military organisation," he said, speaking shortly after Hizbollah hit Israel's third-largest city with 20 missiles, killing eight people and wounding dozens.
Israel has made very clear that it wants to use its offensive to remove the threat of a well-armed Hizbollah from its border, as well as to recover its abducted soldiers.
A heightened state of alert has now been imposed across northern Israel, including the commercial capital Tel Aviv, as authorities realise the range of Hizbollah's vast rocket arsenal may be much further than previously thought.
Thousands of residents have begun fleeing northern Israel and those who are staying behind are sleeping in bomb shelters.
For Hizbollah, a Shi'ite Muslim group originally founded to oppose Israel's invasion of Lebanon 24 years ago, it marks a very hot return to the world stage after several years of relative quiet in its battle with Israel.
In those years, since Israel withdrew from southern Lebanon in 2000 after a 22-year occupation, Israeli military officers believe Hizbollah ("Party of God") has had time to restock its arsenals with help from Syria and Iran.
Israel has said Hizbollah probably has a stockpile of between 10,000 and 12,000 rockets, including Iranian- and Syrian-made missiles with ranges of up to 100 km.
The missile that struck a naval ship off the Lebanese coast on Friday was an Iranian radar-guided, land-to-sea missile, something Israel did not even know Hizbollah possessed.
Because of that, the ship's missile defence systems weren't fully activated because the navy didn't think it had anything to fear, Israeli media reported.
There are now concerns Hizbollah may even have acquired anti-aircraft missiles, since Syria last year bought SI-18 missiles from Russia, Israel's Ma'ariv newspaper said.
"We know about some of the surprises that Hizbollah is planning, and it looks like there are surprises that we still don't know about," the paper quoted a military source as saying.
A further Israeli fear is that, with mounting pressure on the group and the growing possibility that Israel will assassinate its leader, Hizbollah may decide to use everything it has against Israel.
The group, which remained underground for several years after its founding, is estimated to have tens of thousands of fighters, and has carried out many suicide attacks in the past.
It is suspected of carrying out the attack on a U.S. Marines barracks in Beirut in 1983 that killed 241 U.S. troops.
"Hizbollah may engage in commando operations, crossing the border on land," another Israeli newspaper reported, and then suggested almost anything was possible.
"The security establishment has also not ruled out a possible attempt to infiltrate Israel from the air using a glider or paraglider."
In 1967, a Palestinian group carried out a glider attack from Lebanon on an Israeli barracks killing six soldiers.
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