Defense Minister Moshe Ya'alon said on Monday that Israel's policy is not to intervene in the Syrian conflict, "as long as it doesn’t hurt our interest – such as transfer of advanced weapons, missiles, chemical weapons to Hezbollah or escalating the theater."

Speaking at the Knesset's Foreign Affairs and Defense Committee, Ya'alon said that Hezbollah is moving its elite forces into Syria, and that the country has become a battleground between the Shia and Sunni worlds with each side "massacring the other."

Ya'alon said that Israel is watching closely the Russian-Syrian deal to supply Assad's military with advanced S-300 missile systems, but added that the systems are unlikely to be supplied before 2014.

President Bashar Assad, he said, controls 40 percent of the country's territory, while rebels have taken over at least four neighborhoods in the capital Damascus. He added that Israel is providing humanitarian assistance along the border and treating some casualties. "We are keeping a low profile in this matter," he said. "We have no intention of building refugee camps."

Regarding the Israeli-Palestinian issue, the defense minister said that "Israel does not wish to rule over the Palestinians."  "We are ready to launch negotiations as long as there are no preconditions," he said, "and then discuss everything, not just borders." However, he added, "the Palestinians keep avoiding [negotiations] by setting preconditions… we are not willing to pay just for the Palestinians to agree to sit at the table." Ya'alon also mentioned the recent spate in 'price tag' attacks, saying he views them as an act of terror.

Clashes between Hezbollah and Syrian rebels

On Sunday, Lebanese security sources said that several fighters were killed in an overnight clash between Hezbollah guerillas and Syrian rebel forces in Lebanon's eastern border region.

One source said 15 rebels were killed in the fighting east of the Bekaa Valley town of Baalbek, but the exact toll would not be clear until bodies could be retrieved from the remote and rugged border area. One Hezbollah fighter also died, he said.

Syria's two-year-old conflict has increasingly sucked in its smaller neighbor, with deadly fighting shaking the northern Lebanese city of Tripoli and rockets hitting the Bekaa Valley and southern Beirut.

Guerrillas from Shi'ite Muslim Hezbollah, which supports Iranian-backed President Assad, are fighting alongside his army to drive rebels from the Syrian border town of Qusair, while Lebanese Sunni Muslim fighters have joined the anti-Assad revolt.

The latest fighting took place near Ain el-Jaouze in a finger of Lebanese territory which extends into Syria. The sources said the rebels may have been ambushed as they set up rockets to fire into Shi'ite areas of the Bekaa Valley.