by Keren Setton

JERUSALEM, Feb. 4 (Xinhua) -- Days after the new Lebanese government convened its first cabinet meeting, Israel sees its neighbor's new government formation with caution.

Hezbollah, heavily funded by Iran, is one of Israel's most bitter enemies. Their last war in 2006 left both sides scars and put both in a state of mutual deterrence.

The United States, the European Union and other countries consider Hezbollah a terrorist organization.

After months of internal political deadlock, a Lebanese government was formed with Hezbollah getting three important portfolios. With the health ministry in its hands, Hezbollah can take credit for a major achievement.

Hezbollah is still licking its wounds from intense participation in the Syrian civil war on behalf of embattled Syrian President Bashar Assad.

With thousands of militants wounded and thousands dead, the state funds now in the hands of Hezbollah can be used to deal with the issue. The United States, which has imposed sanctions on Lebanon since 2007 in an attempt to curb Hezbollah, has also voiced concern over this particular move.

In Israeli eyes, this will allow Hezbollah to use its own money to strengthen military and continue to prepare for the next conflict with the Jewish state.

"It will enable Hezbollah to increase support within the Lebanese society," said Sarit Zehavi, a former Israeli military intelligence officer and founder of the Alma Research and Education Center on Israel's Security Challenges on its Northern Borders.

Hezbollah, a Shiite group, supplies large-scale social services in the country which enable it to maintain a tough position against Israel in the Lebanese public.

"These developments are very meaningful for Israel," said Yossi Mansharof, a researcher in the Jerusalem Institute for Strategy and Security and an expert on political Shiite Islam, "Israel hoped that the economic efforts against Hezbollah will weaken it."

Speaking to United Nations (UN) ambassadors touring Israel, Israeli Prime Minister Benjamin Netanyahu said "Hezbollah just joined the government of Lebanon. That's a misnomer; they actually control the government of Lebanon. It means that Iran controls the government of Lebanon."

In reaction to this, a senior Hezbollah official told a Lebanese television network, saying his organization only held 10 percent of the government portfolios.

"Hezbollah has been significantly strengthened and will continue to maintain a strategic presence on the border," Mansharof told Xinhua.

Just weeks ago, the Israeli military announced it had finished an operation to destroy cross-border tunnels allegedly built by Hezbollah.

According to Israel, the tunnels were to be used as the opening act for a war Hezbollah planned to wage on Israel. Hezbollah remained largely ambiguous on the matter, without every confirming or denying its involvement in the tunnels.

Israel has been largely unsuccessful in gathering international support or action against Lebanon on the matter.

"Hezbollah is still deterred. Israel showed significant intelligence capabilities in its airstrikes in Syria," said Mansharof. "This has hurt both Iran and Syria. Hezbollah has lost a strategic advantage after Israel exposed the tunnels.

"But Israel is also deterred by the expectation of 1,700 missiles to be fired each day in the event of a war," he added.

With Hezbollah emboldened internally, Israeli action against it may not be met with such a silent response in the near future.