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Lebanese Prime Minister Fouad Siniora said Sunday that Israel can exploit its military confrontation with Hezbollah in order to consummate a peace treaty with Beirut.

The premier said that in order for Jerusalem to take advantage of the opportunity for peace, "Israel has to behave wisely."

On the Syrian front, differences of opinion abound among the Israeli leadership over the possible renewal of peace negotiations with Damascus.

Prime Minister Ehud Olmert expressed reservations regarding recent statements by political figures over restarting talks on the Syrian track, saying that the comments may be misconstrued by the Assad regime.

"[People] don't have to warn us of war with Syria every day and on the other hand immediately pounce on an offer to hold negotiations with them," Olmert said.

"Damascus hoped that over the course of the present crisis it would augment its relevance, even hoping that it would become part of the overall solution," Israel Defense Forces Chief of Staff Dan Halutz said at Sunday's weekly cabinet meeting.

Foreign Minister Tzipi Livni appointed a special "project manager" for possible negotiations with Syria. Yaakov (Yaki) Dayan, who until recently was head of the diplomatic desk in the Foreign Ministry, met last week with Tel Aviv University President Prof. Itamar Rabinovich, who headed the Syrian negotiations team under Prime Minister Yitzhak Rabin in the mid-1990s.

Dayan is scheduled to meet shortly with Uri Sagi, who held the same post under PM Ehud Barak in the late '90s. Dayan has been asked to present Livni and Foreign Ministry officials with a document detailing the chances for resuming the diplomatic dialogue with Syria in the light of Syrian and Israeli positions on substantive issues such as borders, security and normalization.

Ido Aharoni, Livni's media adviser, confirmed Saturday Livni's appointment of Dayan but said there is no reason to infer from his appointment that Livni advocates resuming talks with Syria.

Israeli experts are divided when it comes to analyzing Syrian President Bashar Assad's intentions. Military Intelligence officials emphasize Assad's recent military threats, while Foreign Ministry officials take seriously his call to renew the peace talks.

People in both camps have expressed concern about the growing relations between Iran and Syria as well as their increasing support for Hamas. The declaration last week by Defense Minister Amir Peretz advocating the creation of conditions for talking to Syria followed a series of talks with Syria hands. Associates of Peretz say he has become convinced of the need to examine Assad's intentions. They see he views the Syrian president as an important factor in preventing a renewal of fighting on the northern border and in enforcing the arms embargo on Lebanon.

Olmert opposes any deviation from his strict policy of boycotting Syria as long as the U.S. keeps it on its list of states that support terror. After the outbreak of hostilities in the North, Washington began considering a more conciliatory approach to Damascus. Israeli officials, however, do not expect to see a change in American policy before the Congressional elections this November.