Peace or War? Lebanon on the Brink

As the clashes progressed, government leaders pleaded for calm and Hezbollah leader Sayyed Hassan Nasrallah released an unexpected fatwa urging residents to respect the curfew.

The violence sparked while Paris was hosting the donor conference for Lebanon, the so-called Paris III. From the French capital, Siniora called for restraint.

"What are we doing? No one can help a country where its own people can't help themselves," he said on the Lebanese television station, LBC. "We have to set an example for those people who came from all over, and are watching Lebanon, that we are trying to build a country, not a battlefield."

The premier returned home with more than $7.6 billion in grants and soft loans -- $770 million pledged by the United States -- granted by 36 countries to help Lebanon cope with a debt mountain of more than $40 billion, recover from war and support an unpopular package of economic reforms.

A political solution seems desperately needed.

"We have reached the boiling point, and the political leaders have realized this. All parties are stuck at this point, though it doesn't seem the violence will escalate," Oussama Safa, a conflict negotiator and director of the Lebanese Center for Policy Studies told ABC News.

"Leaders on both side know that they need to reach a compromise," he added. "Despite Hezbollah still being popular because of their social support, especially in health care and education, people are starting to distrust their political agenda, not perceiving them as a peaceful actor in this crisis."

With Some, Pessimism Runs Rampant

On the other hand, Edward Saab, executive editor of An-Nahar, the leading newspaper in Lebanon, fears escalation.

"I cannot help but be pessimistic," he told ABC News.

"If we have elections, Shiites and Christians will win," Youssef, a Sunni taxi driver, said while driving through pot-holed streets and bomb-scarred apartment blocks in the Hezbollah-controlled suburbs in Beirut.

Labeled as a terrorist group by the United States, Hezbollah is backed by Iran and Syria, and Siniora's government has accused its members of pursuing Tehran's interests rather than Lebanon's. The signs of Iran's influence are widespread. Gigantic banners of the leader Hassan Nasrallah cover building facades, side by side with portraits of Supreme Leader Ali Khamanei.

Within days of the end of the war, Hezbollah was granting $12,000 in cash to families whose houses were destroyed, with little doubt about where the money was coming from.

"It is not a secret that part of it comes from Iran," Bilal Naim, a member of the Executive Council of Hezbollah, told ABC News in a tent set up in a leveled area in Dahie, south Beirut. "Shiites are bound to the khomos. They devote 20 percent of their salaries to go to social causes. Our brothers in Iran helped us with this difficult reconstruction."

Back in the center of town, a sit-in staged by the opposition near the parliament enters its eighth week. Festooned on row after row of tents are posters of Maronite Aoun and Hassan Nasrallah.

"This government is corrupt," said Mohammed, just one of the youngsters who has been there since the beginning of December. "We will not leave 'til Siniora will come to terms with our request."

A teenager from Qana who supports the Amal group, Mohammed shares a tent in the makeshift camp.

"I spent last summer recovering bodies with an ambulance," he said. "It was horrible -- children, women. … Where was the government when Israel was killing us?"

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