Fran O'Sullivan: Now we punch below our weight in the global ring

Two years ago I went to take a look at the blue line, the so-called border between Israel and Lebanon that two countries intent on peace then regarded as inviolate.

It was the height of New Zealand's diplomatic standoff with Israel - a stand-off provoked when Israel dispatched three Mossad agents to this country to steal the identities of our citizens as part of a passport-factory operation.

This operation, I discovered, was regarded in Israel as minor stuff and to Israeli eyes had provoked an absurd over-reaction from our Prime Minister.

It was a reality-inducing climb up to the dry dusty heights that divided these two countries that have spilt so much blood in the past few decades. The day before our visit two Israeli soldiers had been taken out by Hizbollah snipers.

Our Israeli Defence Forces (IDF) escort played it relatively safe. We were taken close enough to see clearly the Hizbollah turrets which were pointed directly at the centre where the two Israeli soldiers died, but not close enough to be targets ourselves.

Despite the killings, the IDF escort was sanguine. "We have retaliated. But it is a parsimonious retaliation. We do not want to start a war."

Israel was at that stage enjoying some respite from the waves of suicide bombers. That was then. This is now.

As Israel forges deeper into Lebanon with its own version of shock and awe, it's becoming abundantly clear that Hizbollah's operational strength is much more sophisticated than it seemed either to the IDF or us journalistic observers some two years ago when we scanned the guerilla group's simple turrets through our binoculars.

Hizbollah started the fight with its missile-strike against Israel's communications centre and the abduction of two of its soldiers. But the Lebanese Government has done little to curb the Hizbollah militia since Israel withdrew to the international borders six years ago.

Israelis argue that until you have been to Israel - seen with your own eyes what an impossibly tiny country it is and felt their fear of being surrounded by enemies - that you cannot really conceive why Israeli justice comes with an overwhelming force.

There has been little international pressure, including from New Zealand, for Lebanon to expel Hizbollah. Known as a state within a state, Hizbollah was probably too terrifying for the Lebanese Government to confront.

Instead it allows Hizbollah to keep its watchtowers just behind its borders and place its weaponry on civilian territory from where it showers rockets on Israeli targets.

It may simply be a fact that Lebanese Prime Minister Fouad Siniora does not dare confront a group that is widely believed to be a front for Syrian and Iranian interests. But that should not stop countries like New Zealand from taking a tough line against Hizbollah, as well as Israel.

Prime Minister Helen Clark has done just that, demonstrating yet again that she is our prime Foreign Affairs spokesperson. But apart from sending a letter to his Israeli counterpart, our Foreign Minister has preferred to play media games with the parliamentary press gallery instead of staking out a strong line.

The New Zealand contribution to the United Nations peacekeeping force in Lebanon will stay. But it's really a PR operation, nothing of real consequence.

It's not just the prospect of an outright war between the Muslim world and Israel that should concern us in our safe country at the bottom of the Pacific, it's also the prospect of economic crisis as oil prices climb above US$75 ($121) a barrel, with some predictions they could go has high as US$100 per barrel.

If oil prices continue to spiral they will inevitably have an effect not just on our own country but on those we do business with. The impact on lesser-developed nations will be much more significant than the failure of the World Trade Organisation's Doha round.

But there is little sense that New Zealand is going all out to try to avert this heavy price.

The Bush Administration is giving Israel time to pummel Hizbollah into submission before it really urges the Israelis to come into line. But our own response is bewildering.

We still don't know what message Foreign Affairs Minister Winston Peters conveyed to US Secretary of State Condoleezza Rice in Washington last week on this score. All that was released was an anodyne statement conveying not much more than an exchange of pleasantries.

Cabinet ministers of substance, like Phil Goff, who is clearly chaffing at the bit to get engaged in the debate, must sit on the sidelines while Peters tells Asian countries they must accept New Zealand as one of them because the Maori race shares a distant genetic link with one particular Chinese tribe.

Goff would clearly like to deploy New Zealand troops as part of stronger UN peacekeeping operation if the warring parties can be brought into line. But has to hold his tongue.

We are no longer seen to punch above our weight. This is the tragedy of the constitutional bargain Helen Clark struck to stay in power.