JERUSALEM — Ten years after withdrawing all its troops from south Lebanon, Israel is still wrestling with the results of the unilateral move which cost the Jewish state dearly in terms of deterrence.

In the decade since Israeli troops ended their 22-year occupation of south Lebanon on May 24, 2000, Israel and Hezbollah have fought a bloody war, and the Shiite militia has transformed itself into a well-equipped military force.

Tensions remain high, with Israel accusing Hezbollah of stockpiling sophisticated weapons — including Scud missiles — in preparation for a new conflict.

Leaving Lebanon was supposed to bring an end to what many considered to be Israel’s Vietnam, an unwinnable guerrilla war with an escalating number of casualties.

Pulling out was supposed to strip further Hezbollah attacks of legitimacy and encourage the group to turn its energies to internal political affairs.

The consensus in Israel was — and still is — that it was the right move, despite the devastating war of 2006.

But the way in which the withdrawal was carried out severely weakened the perception of Israel’s military superiority.

“The image the withdrawal created, of Israel being forced to retreat under pressure, unable to hold out for an extended period of time, had almost immediate consequences,” wrote former defence minister Moshe Arens in an editorial in the Haaretz daily this week.

“Whatever deterrent capability Israel possessed was lost to the winds and had to be restored at considerable cost.”

The image of Hezbollah “forcing out” Israel’s military machine is widely regarded as the inspiration for the second Palestinian intifada, or uprising, which erupted months later.

Worse still was Israel’s failure to respond decisively to further Hezbollah provocations in the wake of the withdrawal.

“The pullout and the action following the pullout led to quite a significant deterioration in Israel’s deterrent status and contributed to the events since — the intifada and the 2006 war,” said Jonathan Spyer, senior researcher at the centre for Global Research in International Affairs in Herzliya.

“Israel has paid quite a heavy price.”

For six years, there was an illusion of quiet along the northern border — until July 2006, when Hezbollah militants captured two Israeli soldiers, prompting a massive Israeli retaliation.

In the ensuing 34-day conflict more than 1,200 Lebanese were killed, mostly civilians, and 160 Israelis were killed, mostly soldiers.

“The 2006 war was an inevitable by-product of the failure to re-establish deterrence,” said Spyer. “(Sheikh Hassan) Nasrallah has admitted that had he known the extent of the Israeli response, he would not have got involved, meaning we didn’t have deterrence,” he said, referring to Hezbollah’s leader.

The process largely repeated itself in the Gaza Strip, where Israel unilaterally withdrew its soldiers and settlers in 2005 before coming under a near-daily barrage of rockets fired by Palestinian militants.

In December 2008 Israel launched a devastating 22-day war on the territory, now ruled by the Islamist Hamas movement, aimed largely at restoring deterrence.

“There was a very large-scale rocket problem coming out of Gaza. There is not any more,” Spyer said.

“If you’re going to have a unilateral withdrawal, it is imperative to have deterrence because you cannot decide what happens on the other side after you leave,” he added.

Since 2006, Hezbollah has regrouped and built up an impressive arsenal of 40,000 rockets — three times the number it had in July 2006, Israeli intelligence officials say.

And yet those upgraded capabilities could actually make war less likely in the near future, analysts believe.

“It’s not only that Hezbollah is deterred by Israel, but Israel is deterred by Hezbollah,” said Shlomo Brom, senior research associate at the Institute for National Security Studies.

“Everyone understands that the next round of violence will be much worse,” he said. “No one has an appetite for that.”

Osama Safa, head of the Lebanese Centre for Policy Studies, agrees. He said the 2006 war between Hezbollah and Israel established a new “balance of terror” in the region.

“The new equation today is: we can all start a new war but it would be very difficult to stop it,” he said.