The fighting between Israel and Hezbollah is part of a wider conflict in the Middle East. The BBC News website's World Affairs correspondent Paul Reynolds examines who stands where and what is at stake for the main parties involved.
An Israeli tank moves off to go into battle in Lebanon
Israel sees this war as another part of its long effort to establish itself in the region. It has treaties with Egypt and Jordan and would like one with Lebanon.
However this war has put that prospect off, possibly for many years given the level of casualties in Lebanon. In the meantime, Israel wants Hezbollah removed as a threat since Hezbollah is hostile to Israel's existence.
Israel says the Lebanese government should do this but it is prepared to enforce what it identifies as its own interests anyway.
Israel sees the hand of mainly Iran but also Syria behind Hezbollah, especially in the supply of the thousands of rockets Hezbollah has acquired. One strategic Israeli aim in the war and one shared by the United States is to weaken those links and so weaken the influence of Iran and Syria in Lebanon and the region.
On the other hand, Israel itself will suffer a loss of power and prestige if it cannot show a clear victory.
The government fears that the Israeli onslaught will put all the progress Lebanon has made in recent years at risk and that there could be a return to civil war and strife and a return of Syrian influence.
Lebanon therefore wants an immediate end to the fighting and says that a political agreement should come afterwards, based on Security Council resolution 1559. Passed in September 2004, this called on all militias in Lebanon to be disbanded and the authority of the government extended to the border. Easier said than done, has proved to be the experience.
The Lebanese coalition government was formed after the Cedar Revolution of 2004 which led to the removal of Syrian forces from the country. Hezbollah has two seats in the cabinet even though it opposed the Cedar Revolution. However, Hezbollah feels it can act unilaterally, hence its cross-border raid to capture two Israeli solders. The conflict will help determine its future status in Lebanon.
Hezbollah, the Shia 'Party of God' in Lebanon, is determined to come out of the conflict in a stronger position. It also seeks wider support in Lebanon, which will make it harder for the Lebanese government to bring it under closer control afterwards.
Hezbollah sees itself as in the vanguard of the opposition to the state of Israel, which it regards as a Zionist intrusion into Muslim lands. It was instrumental in making Israel withdraw from southern Lebanon in 2000 and sees in this war a chance for it to diminish Israeli power.
Hezbollah's fate will affect the future influence of Iran and Syria in Lebanon and the region. It is closely supported by Iran, which holds similar views about Israel and which has supplied missiles to its Shia brethren. Syria's interests are more to do with trying to maintain an influence in Lebanon and in supporting an opponent of Israel.
Iran's President Ahmadinejad has said that the "elimination" of Israel is the solution to the Middle East's problems so clearly Iran would like to see Israel (and through Israel, the United States) diminished by the conflict and Hezbollah strengthened.
In that way, its own influence would grow not just in Lebanon but also in the region and among the Middle East's Shia population. Some think that Iran sees in the conflict a welcome distraction from its own nuclear programme. However that issue will return.
Equally, if Hezbollah's power is eventually reduced, so too will Iran's, since Iran is Hezbollah's principal backer.
Syria lost out in Lebanon during the Cedar Revolution and probably knows that it cannot return to its former position, even though at heart it regards Lebanon, for historical reasons, as basically part of Syria and certainly part of its sphere of influence. However it probably sees an opportunity to regain some influence through Hezbollah if Hezbollah emerged intact.
It would like the US to recognise it as a power-broker in the area but so far Washington has refused to do so.
Syria does not want to get drawn into a war, even a limited encounter with Israel. It could not win. It prefers to play a very long game.
The Palestinians never quite know how Israel's battles and deals with others will affect them. Over the years they have concluded that they will have to make their own arrangements so when the dust has settled from this war, their own struggle will come to the fore again though of course it has not gone away.
A key issue for them is whether the Israeli Prime Minister Olmert's plan to leave further parts of the West Bank and consolidate in others will now be abandoned.
The prospect for the Palestinians is that despite the international talk of resolving the fundamental issue of who owns which part of the land, nothing much will be done in practice.
The Bush administration sees the battle against Hezbollah in the wider context of its effort to promote what President Bush called in 2003 a "Forward Strategy of Freedom to Promote Democracy in the Middle East".
This means that it wants Hezbollah to be destroyed as a military force. It would see this as an important milestone in its "war on terror".
The risk for the US is that its efforts are seen as aggressive by some and might be counter-productive in that they could provoke more opposition to US policy.
The US wants to see Iranian and Syrian influence reduced as well. Iran, with its nuclear programme at issue, is seen by the US as a potential threat and anything that undermines Iran is useful in American eyes. However, Israel's own strategic relations with the US might also come under close examination if the conflict ends without Israel achieving its stated aims.
FRANCE AND BRITAIN
France has emerged with increased influence. It has capitalised on its traditional links with Lebanon and has taken a leading role in the negotiations for ceasefire. It has also maintained its philosophical opposition to the Bush administration while forcing the US to take it seriously.
Britain has generally followed US policy. It has thereby attracted criticism but hopes to recoup some of it losses if a long-term agreements can be made.