Hezbollah has proved its point for now, so it has no offensive agenda to speak of at present. Its main focus will be to engage in social and democratic action to revive south Lebanon, its patch, and to improve its position in Lebanon. It gained a lot and lost some in Lebanese public opinion, and it needs to attend to the latter.
Israel is more preoccupied with internal than external battles for now. The difficulty for Israel is that it has punctured its own mythology of military invincibility, and now it has doubts. There's a deeper issue here too, examined in other entries on this blog, concerning the heart and soul of Israel. Is the 'iron wall' philosophy that has guided Israeli policy toward its neighbours to continue, despite recent losses, or is a new and more conciliatory, some would say realistic, approach to be taken? If the latter, this would be seen by some Israelis as a defeat which needs clawing back - though this is an inherent problem arising from defining life as a win-lose battle, which makes loss doubly difficult (USA suffers this too). Either way, Israel is politically and militarily unclear and rather leaderless at present, and this symbolises a deeper problem concerning Israel's purpose and future, prompted by Israel making itself unsafe as a home for Jews.
Palestine is deeply wounded yet, as usual, recent Israeli pressure and atrocity has united Palestinians just at a moment where Israel could actually have exploited divisions in Palestinian society, between the Hamas and Fatah and other camps. By reviving its incursions into Palestine and stopping its planned strategic withdrawal from parts of the West Bank, Israel has seriously weakened its position.
Meanwhile, Palestinians are focused mainly on doing their best with an extremely bad situation - economic and social conditions, especially in Gaza, make it difficult for Palestinians to function well, and a lot of damage has been done. However, Lebanese have taken the heat off Palestine somewhat, and Israelis' anxieties are now aimed toward Iran. This is both a small relief for Palestinians and an increasing danger. A conflict with Iran would happen over their heads, and one of Israel's biggest targets, its main nuclear facility, is on the West Bank, not far from Bethlehem and Hebron.
Israel is part of USA's geostrategic agenda, and both lock arms over Iran, the big bogeyman. There's a problem though. Israel has just proven that massive air attacks don't necessarily work, and that their intelligence assessments are poor. They tried busting Hezbollah's bunkers, but they just got more rocket attacks in return. When they engaged in open battles, they lost too many men and arms. Air attack is the mainstay of any US-Israeli assault on Iran. Iran has also proven that its proxies, such as Hezbollah, can do a good job - meaning for Israel that if it attacks Iran with USA, it must also face Hezbollah and possibly Palestinian fighters in its own backyard, and US and Israel could probably set Iraq alight in a new and lethal way, driving the majority Iraqi Shi'as against them. So, while an attack on Iran is not sensible, militarily or politically, the problem is that there is frustration and unrealism in Israel and USA, and it is possible that they will attack just because the world and the facts seem to be against them - to prove somehow that they are right in the end and know best. A very masculine problem, damaging for many victims, and ultimately fruitless.
So it looks as if there will be no fighting in Lebanon for perhaps a year. How things go thereafter depend on a few things:
whether squabbles arise accidentally - since this area is at present a tinderbox;
whether internal battles in Israel cause the military wing to try more bold moves, to redeem their pride and attempt to protect the military's standing in Israel and the world;
whether the Iran agenda is seriously pursued or whether it is simply not doable;
there could also be complexities arising either in Palestine or Lebanon, if different parties in each place, frustrated with their situation, lose their new-found unity and start squabbling or fighting one another. Trouble is, when people are hurt and rather desperate, things can run amok, and old niggles can surface to create mayhem.
Then there are the international forces entering south Lebanon. These can have both a settling and a stultifying effect - they bring many benefits, helping handle some infrastructural problems and separating warring parties, but they can be bureaucratic and not necessarily do the right thing to get people on their side. Occupying Hezbollah's political patch - Hezbollah is are after all the main provider of public welfare services there - things could get tricky between UNIFIL and Hezbollah, especially over Hezbollah's armaments. On the plus side, there is now quite a bit of experience amongst the UN troops and international diplomats, and on the minus side there are no clear agendas and rules of engagement, and this could get complicated - especially in an emergency.
Then there could be really awkward things, such as the UNIFIL troops being obliged to stand up militarily to the Israelis. This could be a powderkeg - an army against an army. Against Hezbollah, it would be a case of UNIFIL ruling the day and Hezbollah ruling the night. But UNIFIL against Israel would be a classic war situation in which many modern armies actually have little experience today - such wars were forgotten after 1989. Let's hope this won't happen - the implications could be large, in various directions.
But then there's the opportunity for peace too. It's quite big at present. To make peace, it's necessary to slow things down and normalise things sufficiently long that people get out of the habit of conflict. The guys polishing their guns get to fix more cars and spend more time at home with the family, their anger slowly subsiding. This is certainly possible on the Lebanese front, but on the Palestinian front, things are different.
In Palestine, the losses have gone on since 1948 (the Nakba or disaster) and 1967 (the Israeli occupation of Palestine) and, to build genuine peace, there does need to be significant restoration of justice and viability to Palestine, to allow Palestinians to have a decent life. Without this, there will always be trouble, and longterm peace will always be shaken by crises.
The Palestine question has not advanced in recent months. One of the greatest tragedies of continued conflict is that it prevents Palestinians from getting on with improving their lives. It also prevents proper dialogue within Palestine to resolve internal tensions - over power, corruption and contracts, the old guard and the angry young men, conciliation (Abu Mazen) or resistance (Hamas) toward Israel, and other uncertainties arising from the non-resolution of Palestine's future. Recent Israeli actions have united Palestinians, but not because they are discussing things and really working out their own questions - these are shoved to the side whenever the shelling starts.
But the Israel question has advanced - the nation is in shock, and this provokes re-thinking. It could also provoke a more militant feeling amongst the Israeli public or leadership - and this is dangerous because it would be neurotic and angst-filled, liable to explode and undertake more mad operations. But the re-thinking possibilities, rooted in a deep disappointment in Israel with itself and its future prospects, brings an opening of hope.
Israelis like to set the rules of the game, but they also fail to recognise that the Palestinians, Arabs and the rest of the world except for USA, is also waiting for it. Nothing can change in the Middle East until Israel changes - and in this Israel is not game-setting, but tends, when in doubt, just to dig in its heels and refuse to budge, missing big opportunities. This has happened time and again, especially with Syria, and settlements with Jordan and Egypt have necessitated exceptional proactive engagement from these countries to make them succeed. But the wider world is getting impatient - this could at some stage lead to a clinching, defining situation. The two main contenders here are Europe and the wider Muslim world.
Summary: it's unlikely that sparks will fly in the short term, but there are big outstanding questions, and things could go any way. My intuition is that an unforeseen factor could enter the equation soon, which precipitates more truth on all sides - the whole situation is vulnerable to 'factor x' events. We shall see.
Meanwhile, social and humanitarian work is now necessary, to ease the hardships of the people who have been impacted by the recent devastation. And with it, we need an end to the tendency in the wider world to take its attention off the Middle East when the blood stops flowing. The main need is to get those power stations going again in Gaza, to rebuild buildings and lives, re-open the schools, get supplies in and to get life in south Lebanon functioning again - and to digest and learn from recent events. There's a lot of learning needed.