Hezbollah rams Israeli warship with aircraft

~ The group's leader vowed to strike even deeper into Israel with rockets.

BEIRUT, Lebanon -- Hezbollah rammed an Israeli warship with an unmanned aircraft rigged with explosives Friday, setting it ablaze after Israeli warplanes smashed Lebanon's links to the world one by one and destroyed the headquarters of the Islamic guerrilla group's leader.

The attack on the warship off Beirut's Mediterranean coast -- which left four sailors missing -- was the most dramatic incident on a violent day in the conflict that erupted suddenly Wednesday and appeared to be careening out of control despite pleas from world leaders for restraint on both sides.

"You wanted an open war and we are ready for an open war," Hezbollah leader Sheik Hassan Nasrallah said in a taped statement. He vowed to strike even deeper into Israel with rockets.

Israel again bombarded Lebanon's airport and main roads in the most intensive offensive against the country in 24 years. For the first time it struck the crowded Shiite neighborhood of south Beirut around Hezbollah's headquarters, toppling overpasses and sheering facades off apartment buildings. Concrete from balconies smashed into parked cars, and car alarms set off by the blasts blared for hours.

The toll in three days of clashes rose to 73 killed in Lebanon and at least 12 Israelis, as international alarm grew over the fighting and oil prices rose to above $78 a barrel. The U.N. Security Council held an emergency session on the violence, and Lebanon accused Israel of launching "a widespread barbaric aggression."

In addition to the fighting in Lebanon, Israel pressed ahead with its offensive in the Gaza Strip against Hamas, striking the Palestinian economy ministry offices early Saturday.

In another maritime strike, Israel said that a Hezbollah rocket barrage missed its target and struck a civilian merchant ship. They did not know the nationality of the ship, or whether there were casualties.

The ramming of the Israeli missile warship indicated Hezbollah has added a new weapon to the arsenal of rockets and mortars it has used against Israel. The Israeli army said the ship carrying several dozen sailors suffered severe damage and was set on fire. Several hours after the attack, the fire was put out and the ship was being towed back to Israel. The military confirmed news reports that four sailors were missing and said a search for them was under way.

Despite fears the assault could bring down the Western-backed, anti-Syrian government of Lebanon, Israeli Prime Minister Ehud Olmert vowed the campaign would continue until Hezbollah guerrillas, who are backed by Syria and Iran, lose their near-control of southern Lebanon bordering Israel.

Olmert agreed in a phone call with U.N. chief Kofi Annan to allow U.N. mediation for a cease-fire -- but only if the terms include the disarming of Hezbollah and the return of two Israeli soldiers whose capture by the Muslim guerrillas Wednesday triggered the fighting.

Hezbollah rained dozens of rockets on towns in northern Israel. One rocket hit a home in Meron, killing a woman and her grandson. Some 220,000 people in northern towns hunkered down in bomb shelters.

Nasrallah was not hurt after the Israeli missiles demolished his headquarters among two buildings in Beirut's southern neighborhoods, the militant group said. Three people died in the airstrikes.

The attack on the warship was apparently timed to coincide with Nasrallah's message on the militant group's television station. "The surprises that I have promised you will start now. Now in the middle of the sea, facing Beirut, the Israeli warship ... look at it burning," Nasrallah boasted.

Israeli military officials said the drone apparently was developed by Hezbollah. The Lebanese guerrilla group has managed to fly unmanned spy drones over northern Israel at least twice in recent years.

"If they kill us all, we will still not give them back the prisoners," said one resident, Nasser Ali Nasser, as palls of smoke rose from fuel depots hit farther south. "We have nothing left to lose except our dignity. We sacrifice ourselves for Sheik Nasrallah," he said.

President Bush, who has backed Israel's right to defend itself, spoke by phone with Lebanese Prime Minister Fuad Saniora from a G-8 summit in Russia and "reiterated his position" that the Israeli attacks should limit any impact on civilians, White House spokesman Tony Snow said.

But the promise fell short of the Lebanese leader's request for pressure for a cease-fire.

Israel's campaign appeared to have a two-pronged goal. One was to batter Hezbollah and end its near control of the south on Israel's borders.

"We know it's going to be a long and continuous campaign and operation, but it's very clear. We need to put Hezbollah out of business," Brig. Gen. Ido Nehushtan told The Associated Press.

Israel's army chief, Lt. Gen. Dan Halutz, said Hezbollah has rockets that can reach as far as 43.5 miles or more, which would bring more Israeli cities, such as Hadera, within range.

The other goal was to seal off Lebanon by repeatedly striking its airport and main roads -- including the coastal highway from north to south and the Beirut-Damascus highway, Lebanon's main land link to the outside world. At the same time, Israel was gradually escalating the damage to the country's infrastructure, painstakingly rebuilt since the civil war ended in 1990.

Israel holds Lebanon responsible for the capture of its two soldiers in a surprise Hezbollah raid; the Lebanese government insists it had nothing to do with the attack. However, Israel wants it to rein in the guerrillas, a move Lebanon has long resisted.

The level of damage inflicted by Israel appeared finely calibrated. For example, a missile punched a hole in a major suspension bridge on the Beirut-Damascus road but did not destroy it, unlike less expensive bridges on the road that were brought down. An Israeli strike hit fuel depots at one of Beirut's two power stations -- sending massive fireballs and smoke into the sky -- but avoided the station itself.

Throughout the morning, Israeli fighter-bombers pounded runways at Beirut's airport for a second day, apparently trying to ensure its closure after the Lebanese national carrier, Middle East Airlines, managed to evacuate its last five planes to Jordan. One bomb hit close to the terminal building.

Civilian casualties were mounting faster than during Israel's last major offensive in Lebanon, in 1996, an assault also sparked by Hezbollah attacks. In that campaign, 165 people were killed over 17 days, including 100 in the shelling of a U.N. base.

"We are on the right and we shall avenge every attack we endure," said Fadi Haidar, an American-Lebanese who swept up the shattered glass outside his store in south Beirut. "I have huge debts and now my store is damaged. ... But as time goes by, they will all realize that Sayyed Nasrallah is right and is working in the interest of Muslims."

Meanwhile, the U.S. government told Americans in Lebanon to consider leaving when it is safe, and said it was making plans for the evacuation of people who cannot leave on their own.

There was some resentment that Hezbollah had dragged the Lebanese into another bloody fight with Israel. "As long as Hezbollah has its weapons and acts according to its leader's whims, there is pretext for Israel to keep on destroying Lebanon," said Ibrahim al-Hajj, a Christian shop owner in the southern village of Qleia.

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AP correspondents Karin Laub and Josef Federman in Jerusalem, and Sam F. Ghattas and Zeina Karam in Beirut, contributed to this report.