Who won?

The inevitable question being asked is who won the war between Hizbollah and
Israel? Although there is no clear winner, I would say that objectively
Israel won. Nevertheless, major mistakes were made in the Israeli campaign,
and there is to be a committee of enquiry into this established by Defense
Minister Amir Peretz.
The overall mistake seems to have resulted from an unfortunate combination of
a Chief of Staff, Dan Halutz, who was formerly the head of the IAF, and a
non-military civilian leadership, both firsts in Israeli history. This
resulted in an over-dependence on air power to accomplish the mission of
destroying Hizbollah in the early days of the war, and then a reluctance of
the civilian and military leadership to engage in a full ground invasion of
south Lebanon. In fact, once it was obvious that the main aims of the war, to
recover the two kidnapped soldiers and to destroy Hizbollah's rocket launching
capability, could not be accomplished by air power, the IDF was still limited
to localized ground operations. A ground invasion of south Lebanon was not
ordered until a few days before the end of the war, far too late for it to
really have any major or long-term consequences.
No doubt one reason for the caution regarding a ground invasion was the fear
of causing high Israeli casualties. Although in a small country like Israel
116 dead is a large number, nevertheless, given the scope of the war, the
casualty figure is quite small. As the enemy knows, in democracies, every
death is counted and a large casualty count can lead to opposition to the wear
and the downfall of the political leadership.
It should be emphasized that in this war one side wants peace and one aims for
the destruction of the other, namely Israel and Hizbollah, respectively. That
the IAF delivered a major destructive blow to Hizbollah's infrastructure in
south Beirut and south Lebanon is clear. But, they are prepared for high
casualties and major destruction, and are adept at continuing to fight.
Particularly there was hardly a dent in their capability to fire short range
rockets (katyushas) into northern Israel, although their long-range rocket
capability was severely damaged. In the ground war they lost a lot of men
(ca. 500) and most of their underground bunkers and fortified positions. So
from an objective point of view Israel won.
But, in war, especially in the Middle East, things are not always as they
seem.
Objectively Israel won the Yom Kippur 1973 war, but Egyptians regard this as a
victory for Egypt. The fact that they attacked the IDF across the Suez Canal
and that although they received high casualties they were able to fight the
IDF was considered a victory for them. With such criteria, one can always
declare victory, and that is what Hizbollah, Syria and Iran have done. The
fact that Hizbollah was able to fire rockets for a month into northern Israel
and cause significant death and destruction is in itself a victory, the fact
that they were able to fight the IDF notwithstanding the destruction, and were
still fighting when the ceasefire was declared, was in itself a victory. This
has no doubt emboldened Hizbollah's leaders and their sponsors. But, how
many such victories can Hizbollah stand?
This is why they opted for a ceasefire and have kept it. But, under the terms
of UNSC1701 Hizbollah are supposed to be removed from south Lebanon up to
the Litani River and disarmed. Neither of these things are likely to happen,
especially since the Lebanese Government has caved into Hizbollah on this. So
as Israel withdraws, both the Lebanese Army and Hizbollah will return to south
Lebanon, and the expanded UNIFIL, however many soldiers it contains, will not
lift a finger to disarm them.
Nevertheless, the presence of both the Lebanese Army and the UNIFIL will
probably prevent both Hizbollah and the IDF from reinitiating hostilities very
soon. But, after enough time to rebuild its forces and facilities, Hizbollah
will be ready to relaunch attacks on Israel, ignoring the presence of the LA
and the international force. So overall, even though Israel won, not much
appears to have been gained.