The mention came in a report to the U.N. Security Council under Secretary-General Kofi Annan's name, but prepared by his special envoy Terje Roed-Larsen. Among its requests, the report calls for the removal of all foreign forces from Lebanon.

The semi-annual report was sent to the panel of 15 nations earlier this week and a copy was obtained by United Press International prior to its official publication.

The prime target of the report was the Syrian military and Palestinian militias based in the Arab country.

Annan said in the report, "I note the assurance of the Lebanese Army Command that it has the capacity to collect the arms of Palestinian militias if and when a political decision to that effect is taken."

He also welcomed recent statements from both groups indicating a willingness to put their arms "under the state's authority."

The report further called for "free and fair" elections in a Lebanon not dominated by Syria, which has maintained a vast "intelligence network in its neighbor."

As for Hezbollah, the direct link it shares with Iran -- considered the world's largest state sponsor of terrorism -- is underscored midway through the document.

"Hezbollah maintains close ties, with frequent contacts and regular communication, with the Syrian Arab Republic and the Islamic Republic of Iran," Annan said in the report. "In this context, particularly, I have taken note of statements by senior Syrian officials urging a continuation of the 'resistance.'"

The group is described by the U.S. Council on Foreign Relations as "a Lebanese umbrella organization of radical Islamic Shiite groups and organizations. It opposes the West, seeks to create a Muslim fundamentalist state modeled on Iran, and is a bitter foe of Israel."

The council added, "Hezbollah is also a significant force in Lebanon's politics and a major provider of social services, operating schools, hospitals, and agricultural services, for thousands of Lebanese Shiites."

It has long been regarded as funded largely by Tehran.

"There has not yet been any noticeable change in the operational status and capabilities of Hezbollah," the report said. "A group engaged in the democratic political process of opinion formation and decision-making can not simultaneously possess an autonomous armed operational capacity outside the authority of the state."

Hezbollah's inclusion in the government underlined the significance of its possible transformation into solely a political party, Annan said, reiterating his belief "the carrying of arms outside the official armed forces is impossible to reconcile with the participation in power and in government in a democracy."

He also said leaders of most Lebanese political factions had told him they view with favor the eventual integration of Hezbollah into the armed forces.

However, Annan said arms are still being shipped to Hezbollah, as recently as February.

"Arms destined for Hezbollah had been transferred from Syria into Lebanon," the secretary-general said he was told. "Twelve trucks carrying ammunition and weapons of various kinds, including Katyusha rockets, crossed the border from Syria.

"Discovered a few days later at a checkpoint inside Lebanon, the trucks were allowed to continue their journey towards their destination in South Lebanon," he continued, adding an army statement indicated "transportation and storage of ammunition belonging to the 'resistance,' once inside Lebanon, were subject to the ministerial policy statement of the current Lebanese government, which considered the 'resistance' to be legitimate."

Beirut confirmed the Lebanese military had not been authorized to prevent further movement of the material "which had been a common practice for more than 15 years."

However, Annan said Roed Larsen has been assured by the Lebanese government and military "further cases of arms transfers would be put to the direct decision of Prime Minister (Fouad) Siniora, and that no further transfers of ammunitions and weapons have occurred since this incident."

Hezbollah continues to justify its existence as a "resistance" movement by Israel's ongoing occupation of the Shaaba farms area, which the United Nations had determined to be Israeli-occupied Syrian territory but which many Lebanese claimed.

Lebanon and Syria recently agreed it should be regarded as Israeli-occupied Lebanese territory when the border between Lebanon and Syria is demarcated.

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