EU BACKS UN FORCE

Olmert Blames Iran, Syria as Europe Backs UN Force (Update1)

July 17 (Bloomberg) -- Israeli Prime Minister Ehud Olmert blamed the conflict in Lebanon and the Gaza Strip on Iran and Syria and vowed to keep up the fight as long as Israel remains under threat from what he called their terrorist proxies.

Olmert's remarks in a televised speech to the Israeli parliament came as European leaders endorsed a call by the United Nations for a military force to quell the combat in Lebanon. The French government urged a cease-fire. The U.S. government cast doubt on the idea of inserting UN troops, with President George W. Bush seeking pressure on neighboring Syria to disarm Hezbollah guerrillas.

``The battle we are conducting now is against the terrorist organizations operating in Lebanon and in Gaza,'' Olmert said in an address to the Israeli parliament late today. ``They are contractors, acting under the tutelage and with the encouragement of governments that support terrorism and oppose peace, the axis of evil that runs from Tehran to Damascus.'

The Lebanon conflict stretched into its sixth day with Israeli forces attacking Hezbollah's Beirut headquarters and other targets as up to 30 Hezbollah rockets hit northern Israel, including Haifa, the country's third-largest city.

The military operation is the largest Israel has undertaken in Lebanon since 1982 and comes as Israeli forces battle Palestinian militants in the Gaza Strip.

Dollar Rises, Oil Falls

The U.S. dollar surged to the highest level in almost three months against the yen and strengthened versus the euro as investors sought a haven from the Middle East violence.
Crude oil fell 2.3 percent in New York, the biggest decline in five weeks, on speculation that Israel may halt its offensive within days. Israel's Channel 10 reported that a senior Israeli officer had said the attacks may end soon, according to Sky News, which also said an Israeli government spokeswoman denied the report.

Stocks in Saudi Arabia and Egypt rebounded as investors bet a slide caused by fighting may have been overdone.

`Head-On' Fight

Olmert said Israel's goals were the same as the Group of Eight industrial nations, which conferred on the conflict during their summit in Russia. Israel doesn't seek a wider war or a ``head-on confrontation,'' yet must act so its citizens can enjoy a normal life and not be held ``hostage'' by terrorism, Olmert said.

Bush and the other G-8 leaders issued a statement blaming ``extremist forces'' for the fighting. Their message stopped short of condemning Hezbollah's Syrian or Iranian sponsors.
Meeting in St. Petersburg, Russia, the G-8 said Israel has the right to defend itself from rocket attacks fired from Hezbollah positions in southern Lebanon. They demanded the return of captive Israeli soldiers, an end to Hezbollah shelling of Israeli territory and a halt in Israeli operations in Lebanon and Gaza.

The U.S. State Department said the ``international security monitoring presence'' proposed by the G-8 was still a concept. Department spokesman Sean McCormack said in Washington the U.S. wants action by the Lebanese armed forces to secure southern Lebanon, where Hezbollah's militia holds sway now.

McCormack said the U.S. expects UN Security Council action on Lebanon later this week after three envoys -- Vijay Nambiar, Alvaro de Soto and Terje Roed-Larsen -- return from the region. Secretary of State Condoleezza Rice intends to make a trip to the region aimed at laying ``the groundwork for a lasting cessation of violence,'' McCormack said.

Italian Prime Minister Romano Prodi offered to make a ``significant contribution'' to any deployment in Lebanon, after UN Secretary-General Kofi Annan announced the plan at the summit. U.K. Prime Minister Tony Blair, French President Jacques Chirac and German Chancellor Angela Merkel also backed the idea.

Truce Sought

French Prime Minister Dominique de Villepin asked for an ``immediate humanitarian truce,'' after meeting in Beirut with Lebanese Prime Minister Fuad Siniora, according to Agence France-Presse.

Bush voiced reservations about the UN initiative to gain a cease-fire in an informal conversation with Blair at the G-8 that was picked up by a nearby television microphone. ``See, the irony is, what they need to do is get Syria to get Hezbollah to stop doing this shit and it's over,'' Bush said.
Since 1978, the UN has stationed peacekeeping forces in a southern strip of Lebanon. The United Nations Interim Force in Lebanon, or Unifil, now has about 1,990 troops in the country, a contingent that has failed to stop either Israel or Hezbollah from undertaking operations.
The only kind of international force that will make a difference in Lebanon will be one ready to ``kill and be killed,'' said Mark Heller, principal research associate at the Jaffee Center for Strategic Studies in Tel Aviv.

Casualties Rise

Twelve people were killed when an Israeli missile struck a minibus south of Beirut late today, bringing the total number killed in Lebanon to 42 since the morning, Al Arabiya television said, citing reporters.

At least 170 Lebanese civilians have been killed since the conflict began, according to Lebanese police, who decline to be identified. Twenty-four Israelis have also been killed.

Italy and the U.K. sent warships into the eastern Mediterranean as most of the Group of Eight countries made plans to evacuate their citizens from Lebanon and Israel.

Leaving Beirut

The U.S. military today stepped up the voluntary evacuation of Americans in Lebanon and prepared for a potential mass exodus. Pentagon planners will use helicopters and a ferry for the effort. Marine Corps CH-53 helicopters have taken 64 Americans from Beirut so far. We are operating on the scale of potentially thousands of people who want to leave, McCormack told reporters at a briefing. U.S. citizens will be evacuated to Cyprus, he said, either by air or by sea.
Rockets fell on Haifa this afternoon, an Israeli army spokeswoman said. The rockets, which also landed in other northern towns, caused part of a three-story building to collapse and injured six people, police spokesman Micky Rosenfeld, said by telephone. Haifa is the site of Israel's largest oil refinery.

Longest Strikes

Other rockets fired from Lebanon by Hezbollah struck today in areas of Galilee's Jezreel Valley about 50 kilometers (31 miles) inside Israel, the longest such strikes since the conflict began, an army spokeswoman said.

Haifa port, Israel's biggest, ceased operations today and the two vessels berthed there departed, an official for the state-owned Haifa Port Co., who asked not to be identified, said by telephone. She said officials will decide whether to continue the closure tomorrow.

Israel will strike Lebanon's electrical infrastructure if Hezbollah rockets hit Haifa's petrochemicals plants, Israel Radio said, citing an unidentified senior army officer. Until now, Israel hasn't knocked out Lebanon's power grid in order not to undermine the Lebanese government, the officer said, according to the radio.
In Gaza, where Israel has been staging operations since June 28, Israel targeted rocket launchers after Qassam missiles hit two southern towns, the army said. Palestinians reported one civilian death.

In the West Bank city of Nablus, an Israeli soldier was killed and another wounded when Palestinian gunmen threw an explosive device at a patrol, the army said.

Israel unilaterally withdrew from the Gaza Strip in 2005, razing Jewish settlements it established after seizing the area from Egypt in the Six-Day War of 1967. To contact the reporters on this story:

Gwen Ackerman in Jerusalem at gackerman@bloomberg.net;
Dania Saadi in Cairo at at dsaadi2@bloomberg.net
Last Updated: July 17, 2006 15:55 EDT