Iran has recovered much of its military power in Lebanon over the last four years, since the war that brought Israel across the border in response to Hezbollah attacks on Israeli patrols. The UN recognized the evidence of how much Hezbollah had militarized southern Lebanon prior to the war, mainly by emplacing thousands of rockets aimed at Israel. As part of the ceasefire agreement, the UN sent peacekeepers to keep southern Lebanon demilitarized. This did not work. Hezbollah used armed force and civilian mobs to prevent the peacekeepers from doing their job. The rockets were moved back in and fortifications rebuilt. Recently, a French paratrooper battalion refused to back down from the Hezbollah pressure and has forced the UN to confront its failure. The UN is likely to lose, as they have lost in similar situations so often in the past. Most UN officials are concerned with keeping things quiet, rather than trying to enforce any peace agreements. Israel does not agree with this interpretation of peacekeeping, but most UN officials consider Israel the bad guys and ignorable. So Hezbollah will continue restricting UN activities in southern Lebanon, to enable its military forces to move freely and continue preparations for another war with Israel. Hezbollah leaders don't want this war anytime soon, but the preparations are important politically, to show the majority of Lebanese that Hezbollah is powerful because it's one of the few Arab forces ready and willing to take on the Israelis (and survive the inevitable defeat). Ideally, Iran would like to control all of Lebanon, but Hezbollah is a Shia organization, and the Shia are only about 40 percent of the population. But cash and weapons from Iran, and willingness to use terrorism to get their way, have given Hezbollah veto power over Lebanese government decisions, and de-facto control of the south. However, the Lebanese majority got the carrot, as well as the stick, from Iran. Some cash, and things like assistance in rooting out the vast Israeli intelligence network in Lebanon, has made the Lebanese majority less hostile to Hezbollah and Iran (and Iran's other puppet, Syria, which claims Lebanon as a lost part of "Greater Syria.")
Turkish politicians have backed themselves into a corner by supporting the Turkish radical group (IHH) that organized the convoy of ships that tried to break the Gaza blockade. Nine Turkish members of pro-Terrorist Islamic charity IHH were killed when they attacked Israeli commandos landing on one of the ships. Despite video evidence that the nine Turks attacked the Israeli commandos with metal pipes and knives, the nine are considered martyrs in Turkey and the Islamic politicians who run the government must risk cutting diplomatic (and many other) relations with Israel if Israel does not take the blame for the deaths of the nine Turks. Israel refuses to do this, because it is politically impossible to take the blame when so many Israelis blame the Turks for supporting the Gaza flotilla, which was trying to open supply lines for Hamas, an organization openly dedicated to the destruction of Israel. The Turkish leaders have a problem in that many Turks do not back IHH and blame Israel, including many commanders in the Turkish armed forces.
Israeli soldier Gilad Shalit has now spent four years as a prisoner of Hamas, and efforts to arrange a prisoner exchange continue to fail. The latest Israeli offer, of a thousand imprisoned Palestinians, was rejected by Hamas because not enough of those Palestinians were hard core terrorists. Hamas won't admit this, and blames Israel for the collapse of the deal. But that's what it's all about, Hamas getting more key Palestinians out of prison. Hundreds of these men were arrested, mostly in the five years after the Palestinians resumed their terror attacks in 2000. It was during that period that new tactics enabled Israel to break the back of the terrorist organizations. While many terrorist leaders and technical staff were killed, many more were arrested, tried and imprisoned. Hamas is determined to use Shalit to free many of these killers, and that is why Hamas keeps trying to capture more Israeli soldiers.
Meanwhile, Hamas is still at war with Fatah (the older, and more corrupt, Palestinian political party that still rules the West Bank, but lost control of Gaza five years ago). Hamas has increased its efforts to root out remaining Fatah supporters in Gaza. In the last two months, this has led to more arrests, torture and murder for Fatah backers. In the West Bank, Fatah has used somewhat less violent tactics against Hamas supporters. Fatah wants to maintain its reputation as the more secular "good guys." But Fatah and Hamas are locked in a death match over control of the Palestinians, preventing any realistic peace talks with Israel. This causes a lot of problems that Israel gets blamed for. Case in point is the growing power shortages in Gaza. The main cause is the feud between Hamas and Fatah. While Hamas controls the power plant in Gaza, Fatah is supposed to provide most of the money for fuel. But now that Hamas and Fatah are feuding more enthusiastically, Fatah has cut off the fuel money, and Hamas refuses to pick up the slack. Hamas has been having cash flow problems of late, and really can't afford to buy fuel. Meeting the payroll for all its police organizations is deemed more important. Since Hamas has established a police state in Gaza, this makes sense. But they have to do it in the dark for the moment.
Israel is pressuring the U.S. to not allow Saudi Arabia's 150 F-15 fighters to be upgraded, or for any more F-15s to be sold to the Saudis. Although the U.S., and the Saudis, see this program as necessary for protection against Iran, the Israelis also know that future Saudi rulers could easily be convinced to turn the Saudi F-15s against Israel.
Violence between Israeli police and Jewish radicals (who believe the West Bank should be Israeli and that all Arabs should be expelled) continues. Palestinians are also increasing their demonstrations, and use of violence.
July 1, 2010: Israeli police arrested six Arab-Israelis, including a career soldier (a Druze) in the army. The six were accused to providing an Arab Israeli drug smuggling gang with information on Israeli border security. The drug gangs are known to work closely with Hezbollah, which controls drug operations on the other side of the border. The Druze are an Islamic sect considered heretical by most mainline Moslems. Thus Druze are the only Arabs subject to conscription in Israel. But the Druze can be tempted by cash, and appeals to "help their Arab brothers" (despite centuries of oppression by their Arab brothers.)
June 30, 2010: A rocket fired from Gaza hit an Israeli factory, causing slight damage. There were no injuries.
June 26, 2010: An Arab language satellite TV channel ("Al Aqsa TV"), originating in Gaza, has been blocked from the satellite delivering the channel to France, because the French government deemed al Aqsa's material anti-Semitic. Several Arab governments protested this move, insisting that al Aqsa was merely saying what most Arabs believed (that Israel should be destroyed and Jews killed).
June 24, 2010: Iran cancelled its plan to send several ships to break the Gaza blockade. The official reason was to blame Israel. The real reason was that Egypt told Iran that the ships would not be allowed through the Suez canal.
Israel announced that, two days earlier, it has successfully launched another photo-reconnaissance satellite. Israel now has three satellites collecting intelligence information.
June 23, 2010: Someone in Gaza fired a dozen mortar rounds into Israel. Within two days, Israel launched three air raids in retaliation. A suspected bomb factory and two weapons smuggling tunnels were hit.