VIDEO - Prime Minister Ehud Olmert said Wednesday that "the events this morning are not terror attacks but actions of a sovereign state that attacked Israel for no reason. The Lebanese government, of which Hizbullah is a member, is trying to destabilize regional stability. Lebanon is responsible and it will bear responsibility."
He added: "At this moment security forces are operating in Lebanese territory and this evening the government will meet to approve the continuation of the operation in Lebanon."
Olmert responds to events (Video: Danny Dagan)
"These are difficult days for the State of Israel and its citizens. There are elements in the north and south that threaten our stability and challenge our stamina and determination," the PM sated. "They will fail and pay a dear price for their actions," he said.
Northern Attack 11 wounded; 2 soldiers kidnapped / Ahiya Raved (VIDEO) Under massive fire in a coordinated attack, Hizbullah kidnaps two IDF soldiers, demands prisoner release in exchange for troops. Israel confirms two soldiers missing. IDF strikes targets in south Lebanon, conducts ground search in bid to locate troops Full story
Olmert has ordered the government to convene on 7 p.m. Wednesday for an emergency meeting in wake of events on Israel's northern border. Foreign Miinister Tzipi Livni will convene a meeting at noon to discuss the abduction.
The meeting will concentrate on Israel's alternatives for a response in the international arena, including the possibility of turning to the United Nations for assistance and to the Security Council with a motion to condemn the recent attack.
He said Israel's response will be "restrained" but "very painful."
"Syria proved it is a terror government by nature. It is a government that supports terror and encourages murderous acts by terror groups within and outside its territory. Necessary measures will be taken against the Syrian government," Olmert said.
Defense Minister Amir Peretz said that "the State of Israel considers the Lebanese government responsible for the attack in the north. The government is also directly responsible for the fate of the abducted soldiers and must operate immediately and firmly in order to locate them, prevent any harm from being done to them, and return them to Israel."
"The Lebanese government, which allows Hizbullah to operate freely against Israel from within its sovereign territory, will bear full responsibility for the consequences. The State of Israel considers itself free to act in any way it sees fit, and the IDF has been instructed accordingly," Peretz added.
Israel Defense Forces Chief of General Staff Lit.-Gen. Dan Halutz said the kidnapping of two soldiers by Hizbullah marks a turning point in Israel's policy towards the Lebanese government.
Security officials said if the soldiers are not returned safe Lebanon will pay a heavy price as Israel will turn the country's clock back 50 years. The IDF has taken measures to call up reserve soldiers in preparation for a wide-scale operation in southern Lebanon.
"The prime minister and the defense minister understand the situation and that's what they plan to do," Halutz said.
'IDF must act in full force'
The tension of recent hours was evident at the Prime Minister's Office. The PM received constant updates from his military secretary, Major-General Gad Shamni, regarding developments on the northern border. However, due to his meeting with the Japanese prime minister, Olmert has been unable to convene his staff for consultations.
In Kadima, Olmert's party, most officials chose not to comment on the serious incidents, which pose a substantial challenge to the PM and the defense minister.
The coalition chairman, Knesset Member Avigdor Yitzhaki, said that Israel's deterrence power does not depend solely on its civil leadership: "We are all aware of the IDF's capabilities. Israel has withstood tougher situations in the past. We must activate our military power in full force in order to annihilate and uproot these phenomena – not only in Lebanon, but in pro-terror countries such as Syria as well."
"The prime minister and the defense minister understand the situation, and this is what they plan to do," he added.
Israel has launched an incursion into southern Lebanon in what they claim is a search for two Israeli soldiers. The soldiers were taken Wednesday following an attack by Hezbollah, a Lebanese militia, that had made an incursion into Israel. 

Three Israeli soldiers died and eleven were wounded when army transports patrolling at the Israeli-Lebanese border were attacked on Wednesday morning, near the Israeli village of Zar'it. Hezbollah also fired mortars and long-range rockets at the Israeli town of Shlomi and nearby communities. Six Israeli civilians were injured by the artillery fire.

After the attack two soldiers were found to be missing. Israeli troops and tanks then entered southern Lebanon, having claimed the soldiers were kidnapped. Following the incursion, five more soldiers were killed, four of them when an Israeli tank hit a mine. Hezbollah said one of its members died.

The Israeli air-force targeted several roads, bridges and Hezbollah outposts in an attempt to stop militants from moving the soldiers, Israel said. Two civilians were killed in an air raid on one of the bridges, while 23 others have been injured. Israeli artillery and gunboats also attacked other targets on Lebanese soil.

Later, Hezbollah said they had destroyed an Israeli tank which had crossed the border into Lebanon.

Ehud Olmert, Israel's Prime Minister, blamed the attack on the Lebanese government calling it "an act of war" and vowed to deliver a "very painful and far-reaching" response. Israel Defense Forces Chief of Staff Dan Halutz told Israel's Channel 10 that if the soldiers are not returned "we will turn Lebanon's clock back 20 years".

Hezbollah Secretary-General, Sheik Hassan Nasrallah, hailed what he called the capture of the two soldiers calling them "our natural, only and logical right". He also said that the soldiers were taken to "a far away place" and that the only way to get them back was through an exchange with Lebanese and other Arab prisoners in Israeli jails.

The Israeli cabinet is in an emergency meeting and has yet to make an official statement about the situation. PM Ehud Olmert said previously that swapping of prisoners is not an option.

Hezbollah's announcement of their captures led to celebration scenes in a Hezbollah-strong suburb in Beirut with firing of guns in the air and handing out candy to children.

The Lebanese government issued a statement after an emergency meeting of the cabinet saying that it was not informed of the intentions of Hezbollah and that it does not endorse the group's actions. Prime Minister Fouad Siniora was quoted as saying that "the government was not aware of and does not take responsibility for, nor endorses what happened on the international border". 

Hezbollah currently has two sitting members on the Lebanese government's ruling coalition.

The view recognized by the United States is one that condemned the attacks, but acknowledged that Lebanon had little say over Hezbollah in the south. The White House  said the militant group's violent actions were supported by Iran and Syria.

Israel has filed a complaint with the United Nations which called for the Security Council to enforce resolutions urging Lebanon to extend its authority throughout its territory and to disarm its militias.