The abrupt, deeply alarming weekend escalation in fighting between Israel and Hezbollah in Lebanon is exactly what the US, France and Britain have been working desperately to prevent ever since Israel’s assassination of the Hamas leader, Ismail Haniyeh, in Tehran almost a month ago. The renewed violence, which appears to have abated quickly but could plainly flare up again at any moment, represents a potentially serious setback for international peace efforts. It is a further blow in particular to US president Joe Biden, whose hopes of a wider Middle East settlement before he leaves office are in tatters. The fighting is also likely to negatively affect the already stuttering, indirect Israel-Hamas ceasefire and hostage-release talks in Cairo, which are taking place against the backdrop of continuing violence in Gaza. Hezbollah is closely allied with Hamas. Both organisations are sponsored and to some extent directed by Iran’s rejectionist clerical regime. Ongoing Israeli airstrikes in Gaza in recent days have reportedly killed dozens more people. In total, more than 40,000 Palestinians, mostly civilians, have died there since the 7 October Hamas atrocities that killed about 1,200 Israelis. Jewish settler violence and land grabs are also accelerating in the occupied territories. The fear today, as in the past, is that all these bitter conflicts will merge together into one huge regional conflagration drawing in other Iranian proxies in Yemen, Syria and Iraq, and forcing, in turn, a military response from the US and its allies, which have built up their military presence in recent weeks. The ultimate nightmare is that Iran itself will directly confront Israel (or the other way around). There was a foretaste of that in April, when Tehran launched an unprecedented barrage of missiles and drones at Israel. Most were shot down. Ayatollah Ali Khamenei, Iran’s supreme leader, declared after Haniyeh’s assassination on 31 July that Iran was duty bound to punish Israel and appeared to threaten full-scale war. So far, that larger threat has not materialised. What Israel calls “pre-emptive” action against Hezbollah may have been partly triggered by fears that this promised Iranian retaliation was beginning. But there will also be suspicions that the Israeli prime minister, Benjamin Netanyahu, purposely seized on an opportunity to escalate the border confrontation with Hezbollah that has simmered since 7 October. Opponents and critics accuse Netanyahu, with some justice, of blocking a Gaza deal in his unrealistic pursuit of “total victory” – and deliberately stoking an expanded conflict to aid his political survival. Netanyahu’s nihilistic, dead-end strategy has deepened social and political divisions within Israel, infuriated the families of the Gaza hostages and dismayed Israel’s allies. The country’s security and army chiefs are in revolt. And the government’s relations with the US, its principal protector and arms supplier, have hit an all-time low. What is Netanyahu’s plan? Does he have one? Because his governing majority in the Knesset, and his own position as premier, depend on the support of a handful of extremist religious and Jewish nationalist ministers and deputies, and because he could face jail on corruption charges once he is out of power, opponents say Netanyahu has no interest in peace on any front. In fact, it is claimed he and Yahya Sinwar, the Hamas leader in Gaza, share a common interest in keeping the fires of war, hatred and division burning – and in spreading the flames. For if they fail, it is they themselves who will be consumed. Ehud Olmert, a former Israeli prime minister, put all this into words in an extraordinary attack on Netanyahu and the “terror criminals” – his description of two hard-right ministers, Itamar Ben-Gvir and Bezalel Smotrich – published in the Haaretz newspaper as the latest Lebanon fighting erupted. Netanyahu, Olmert wrote, was a “narcissistic, immoral, spineless crook”, leading the state of Israel into the abyss. “Netanyahu does not want the hostages back [and] in the absence of an agreement for the release of all the hostages, there’s no real chance of stopping the latest military move in the Gaza Strip,” he claimed. “This will go on for many more days. At the same time, the violent conflict in the north will continue … Hezbollah firing long-range missiles, Israel responding on a scale we haven’t yet seen, and deterioration into an all-out war.” A continuing, multi-front confrontation “is the only [choice] that serves Netanyahu’s priorities, and apparently also Yahya Sinwar’s needs,” Olmert warned. “Both Sinwar and Netanyahu hope that in the end, Iran will enter into a direct confrontation with Israel” – which would force the US, Britain and France to intervene. Calling for an immediate halt to the war, the former prime minister urged Israel’s defence minister Yoav Gallant, defence forces chief of staff Herzi Halevi, Shin Bet head Ronen Bar and Mossad chief David Barnea – all of whom have been publicly critical of Netanyahu – to resign. Presumably the purpose would be to bring down Netanyahu: a laudable aim, long overdue. All is not lost. So far, at least, the feared, all-engulfing explosion has not occurred. The latest Israel-Hezbollah fighting, though spectacular, is limited in scope. Civilian targets appear to have been largely avoided by both sides. Reported casualties are light. Hezbollah says the “first phase” of its offensive is over. The antagonists are treading a very fine line. But it could be a lot worse. When Netanyahu tries to use this confrontation, as he surely will, to demonstrate to the Americans and the west that Israel is under immediate, mortal threat – or if he escalates again – the allies should think very hard before they jump. The biggest current threat to Israel’s existence and a Gaza ceasefire is not external. It comes from within. Simon Tisdall is the Observer’s foreign affairs commentator