Israel warns Lebanon of prospect of ‘all-out war’ as U.S. seeks to de-escalate hostilities

Israel's army approved an offensive against Lebanon after a spike in cross-border fire, as talk of "all-out war" stoked concerns over the Gaza conflict spiraling into the broader Middle East.

"Operational plans for an offensive in Lebanon were approved and validated, and decisions were taken on the continuation of increasing the readiness of troops in the field" by commanders of the Israel Defense Forces, the Israeli military said Tuesday night, without disclosing whether the initiative would involve mobilizing troops into the neighboring nation.

Israel and Hezbollah, which controls much of Lebanon, have been trading fire since October in parallel with the Jewish nation's war campaign against Palestinian militant group Hamas in the Gaza Strip. Both Hamas and Hezbollah benefit from Iranian patronage, and the Lebanese group claims solidarity with the plight of Palestinian people – more than 37,000 of whom have been killed since the start of the offensive, according to figures from the local Ministry of Health.

Hostilities intensified after the IDF last week reported that an Israeli strike in the southern Lebanese village of Jouaiyya killed a senior Hezbollah commander, Sami Taleb Abdullah, along with three other group operatives. As recently as Wednesday morning, the Hezbollah-aligned al-Manar TV news outlet reported that the group launched a missile attack targeting Israeli soldier positions in Metula in Israel, according to a Google translation. CNBC could not independently confirm the report.

The IDF announcement came after Hezbollah released a nine-minute video of what it claimed to be aerial footage captured by surveillance drones. The Lebanese group said the area revealed in the clips stretches over 6.5 square kilometers (2.5 square miles) of Israel and is positioned 24 kilometers (nearly 15 miles) off Lebanon's border with the Palestinian territories, alleging that it includes the Haifa port and military base and the Rafael military complex. CNBC could not verify this footage and has reached out to the IDF over its authenticity.

The video ignited fear and fury in Israel, where Haifa mayor Yona Yahav likened it to "psychological terror on residents of Haifa and the north," according to Reuters.

Foreign Minister Israel Katz said in a social media update that his country is now "very close to the moment of decision to change the rules against Hezbollah and Lebanon. In an all-out war, Hezbollah will be destroyed and Lebanon will be severely hit."

Katz acknowledged the likely toll on Israel, which is strained by simultaneously fighting Hamas in the Gaza enclave, and faces increasing international pressure to limit civilian Palestinian casualties.

"The State of Israel will pay a price on the front and home fronts, but with a strong and united nation, and the full power of the IDF, we will restore security to the residents of the north," the foreign minister said.

"I remind you that, according to the United Nations, there is no territorial dispute — no territorial dispute — between Lebanon and Israel," Israeli government spokesman David Mencer said during a Tuesday press briefing. "Whether diplomatically or militarily, one way or another, we will ensure the safe and secure return of Israelis to their homes in northern Israel. That is not up for negotiation."

Security concerns have driven thousands of Lebanese and Israeli civilians to flee their border-facing settlements.

The two neighboring states have been in a nominal U.N.-brokered cease-fire since a 34-day war in 2006. The U.S., which views Israel's ties with Lebanon as intertwined with the odds of a truce in the Gaza Strip, has been attempting to de-escalate the hostilities. U.S. senior envoy Amos Hochstein met with the Israeli and Lebanese leadership earlier this week.

"Let me be clear: the conflict along the Blue Line [of demarcation] between Israel and Hezbollah has gone on for enough," Hochstein told a press briefing on Tuesday, during a visit to Beirut.

He stressed the White House's ambitions to avoid a spillover of the conflict into a broader war, noting, "The conversations that I had here today in Beirut and the ones that I had yesterday in Israel both are being conducted because the situation is serious, we have seen an escalation in the last few weeks, and what [U.S.] President [Joe] Biden wants to do is to avoid a further escalation to a greater war. That is the effort here."

Lebanon has since sought to distance itself from the hostilities.

"Lebanon does not seek escalation, and what is required is to stop the ongoing Israeli aggression against Lebanon and return to calm and stability on the southern border," caretaker Lebanese Prime Minister Najib Mikati said during his meeting with Hochstein, according to Google-translated comments released by his office.