Extract of an article in Issue 8, August 4, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. A freshly printed poster of a Hizballah fighter holding a machine gun sits between murals of Bugs Bunny and Tweety Bird on the wall of a crumbling elementary school, with no apparent irony intended. This is southern Beirut, Hizballah country, the area hardest hit by Israel during what Lebanese call the "July War" of 2006. While the infrastructure collapsed, what did survive the war intact, if not strengthened, is Hizballah's Iranian-inspired culture of martyrdom and resistance. However, two years later, slogans and claims of victory cannot hide the fact that Hizballah's promised reconstruction effort is falling years behind schedule, and, in the south of the country, the vaunted heart of the resistance, despair persists over unending economic isolation and stagnation. Even in the best of times, the streets of south Beirut are crowded, with about one million people living in the mostly Shi'ite area called the dahiya. Block after block, as far as the eye can see, was flattened by Israeli bombing during the 34-day war. These days, bulldozers and trucks haul endless tons of rubble out and new cement blocks in, clogging the narrow roads, But there's only slow progress for all their efforts. The southern suburbs, though less than two miles from West Beirut's beaches, cafÃ©s, nightclubs and bars, packed this summer with tourists, feel like another world, a world resembling Tehran more than anyplace else. It's not just the Islamic clothing stores for women seemingly on every other block and the bearded men. Oversized posters of the Ayatollahs Khomeini and Khamanei are the same as those seen on the streets of the Iranian capital. Though here, the image of Hizballah leader Sheikh Hassan Nasrallah is also ubiquitous. Banners of Shiite leaders going back to the 1980s line the streets, hang from lamps, are plastered on buildings and cover countless billboards. A small garden bears a sign proclaiming it as a gift from the city of Tehran for the "honorable and steadfast Lebanese people." Uniformed Hizballah police direct traffic, coordinating with colleagues by walkie-talkie and keeping a close eye on any foreigner who lingers a little too long in the street. The same sense not only of Hizballah's tight control over public life, but also of eyes always watching, can be felt in the south of the country. That's probably because, as the owner of an electronics store in a town close to the Israeli border put it, "The people are Hizballah, whether it's the doctor, the farmer, or the store owner. We are all Hizballah." And with its own military, police, intelligence apparatus and social-service network, it is difficult to characterize the organization's domination any other way. The amount of propaganda is staggering. Apart from the posters, banners and images of martyrs dating back to the 1980s, bombed-out Israeli military hardware, captured tanks of the long vanquished Christian-led South Lebanese Army, all trumpet the success of Hizballah's "resistance" strategy and divine victories. The Lebanese Army maintains a symbolic presence in the south and in south Beirut, but in both parts of the country, Hizballah is firmly in charge. The surprise takeover of west Beirut this spring made it clear for anyone with doubts that Hizballah is the strongest, most powerful and most effective institution in Lebanon. Perhaps for these reasons, people do not openly blame Hizballah for the slow pace of reconstruction, just as evident here as in Beirut. To visitors driving along the winding roads, villages and towns seem to have little life left in them. Some of the expensive villas belonging to wealthy absentee owners, many working in West Africa's oil industry, remain as riddled by bullets as they were at the end of the summer of 2006. Some pock marks have been covered up with cement, but lack the final layer of pastel stucco. Most construction sites were empty, as stone, bricks and other equipment sat in neat piles under the hot sun. A group of three workers rebuilding one home wrecked in the fighting were asked who was funding the reconstruction of the south. "The Qatari and Iranian governments," they said. In one village, a mural of the Qatari flag covered the side of the building. "Thank you, Qatar," it read. Even with the outside assistance, though, the electronics store owner and other residents estimated it would take another five years to rebuild. Qatar's ruler, Sheikh Hamid bin Khalifa al-Thani, pledged in the fall of 2006 to pay whatever the cost to rebuild four southern towns: Bint Jbeil, Aita a-Shab, Khiam and Ainata. He is also financing the reconstruction of any schools and places of worship south of the Litani river damaged during the war. South Lebanese residents interviewed for this article universally lamented an increasingly dire economic situation, and all blamed political instability, though no one mentioned Hizballah. South Lebanon has always been the front line in an open-ended war with Israel, and remains more vulnerable than the rest of the country to the consequences of political tremors. A Lebanese woman who works as a tour guide explained that life in the south has gotten worse since 2006 for one reason: "The war took people here by surprise, and now no one wants to invest in building a business when it could be destroyed, in some cases, again." On July 7, Israel signed a deal with Hizballah under which the organization would hand over Ehud Goldwasser and Eldad Regev, the two IDF soldiers whose capture in 2006 set off the war. Five Lebanese prisoners will be repatriated, including the notorious terrorist Samir Kuntar, as will the bodies of Hizballah fighters killed during years of conflict with Israel. The two sides have engaged in similar exchanges before, with no seeming progress in relations between them. Indeed, the lack of confidence in the future has led many younger people to emigrate to the Persian Gulf and beyond. One southern town appeared nearly empty with only a small group of elderly men sitting in lawn chairs in the main square overlooking a spectacular view of hills dotted with small villages. The instability means few opportunities and jobs and the young people have left, they said, their sons and daughters included. "We're moving backwards, not forwards," said one, and the rest agreed. One elderly man, whose three sons now live in the Gulf, was stopped by this reporter as he drove his late-model Mercedes down a steep hill in the village. Though past retirement age, he works as a taxi driver to make ends meet. "I have so few clients that I'm not really a taxi - I work as a servees (picking up more than one person going in the same direction for a reduced fare). In the middle of the same town, the thirtyish owner of a small supermarket talked about how increasing prices are driving people to emigrate. Her husband has a white-collar job with one of the few international companies operating in southern Lebanon. But soaring expenses due to hikes in food and fuel prices are leading them to look into getting jobs outside the country. "It's dead around here," she said. "Look outside - no one is here." In 20 minutes, she sold only a few packs of cigarettes. Electricity, provided by a privately-owned company, is expensive and last month, she says, it cost $200 for the store alone. "The Lebanese government is giving us no thought," said the electronics shopkeeper in the border town. Apparently the Iranian government is, however, as portraits of Khomeini and Khamenei, as well as Nasrallah, dot the landscape. A Hizballah member encountered during a visit to the south also discussed the regular visits Iranians make to that part of the country. Another reason potential investors might avoid the south is the trouble it takes to get there with a non-Lebanese passport. Various papers and permits are required, and if anything is missing, a visitor can be turned back by the Lebanese Army in Sidon. Should Hizballah be contacted? Will a rental car raise eyebrows? The process is murky, with applicants running to bring passport pictures or any number of items in an attempt to get approval from the Lebanese Army to enter the region. "People say Hizballah is a state within a state. It's actually a state within a failed state," said a Beirut-based observer of Lebanese politics. Political differences between Hizballah and the "March 14 coalition," the alliance of political parties led by Saad Hariri, the son of assassinated former prime minister Rafiq Hariri, that currently dominates the Lebanese parliament, have led to sectarian street clashes in recent months in which nearly 70 people have died. It's actually tribal politics in the guise of sectarianism, said the analyst. Political leaders, including Hizballah chief Nasrallah, "will never be seen giving away anything that belongs to their own people. Nobody is going to give up the privileges and prerogatives of their community." The analyst echoed what others, supporters or Hizballah or not, also believe: Hizballah will not disarm because it would lead to their marginalization. Largely shut out of the 19-year-old power-sharing agreement that holds post civil war Lebanon together, Shiites under the leadership of Hizballah have built up a parallel state to challenge the actual one, both politically and militarily. With the Doha agreement in May, Hizballah and its political allies were allocated 11 out of 30 ministerial posts, widely considered a victory for the party, known as "the opposition." Yet the agreement also prohibits "the use of weapons or violence or taking refuge in them in any dispute whatsoever and under any circumstances." Extract of an article in Issue 8, August 4, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.