GHANDOURIEH, 2 September 2007 (IRIN) - Four walls and a roof bristling with concrete pillars are all that remain of Faten Muslimani's house on the hill.

Israeli bombs flattened her old home, in the village of Ghandourieh, southern Lebanon, in last summer's war with Hezbollah's armed wing. Government compensation arrived with the spring, but covered only the foundations and shell. For now, work has stopped.

"The only ones in the village who can afford to finish their homes are the ones who can pay from their own pockets. We can't and we have no idea when the second payment will be," she says.

Those who lost homes in the war receive compensation in two parts to a maximum of US$40,000, or one if under $8,000. The Israeli bombardment destroyed or damaged nearly 120,000 homes and 862 schools in the south and southern suburbs of Beirut and demolished 91 bridges, the government said.

The Muslimanis are renting a flat nearby; they have furnished its unfinished rooms with the pieces they can afford - plastic chairs and a curtain to hang in place of the absent bedroom door.

Hezbollah paid the family of three a year's rent, which has just run out. "We're paying ourselves now, which is a lot for us. We're so tired and just waiting to get our lives back together again," Muslimani says.

Ghandourieh was one of southern Lebanon's worst-hit villages. Perched strategically above the Litani river, the village of 2,000 people was destroyed last summer for the second time - the Israeli army nearly razed the village in its 1978 invasion.

"There was barely a house left standing," said Khalid Hammoud, record-keeper in the village municipality and head of the local school. "The people of Ghandourieh are resilient."

This time, 70 dwellings were razed and about 100 severely damaged, he said. Villagers are rebuilding homes and the United Arab Emirates (UAE) repaired the school he heads. But with no computers or furniture, pupils study in a nearby town.

Inflation erodes compensation payments

"A major crisis we're facing is inflation in the price of materials, cement, sand and glass - they all went up because of demand," he said. "So compensation people were awarded has gone down in value." A payment that would have met 50 percent of rebuilding costs now covers 30 to 40 percent, he said.

A two-year-old political split between the US and Saudi-backed government and a Hezbollah-led opposition has slowed compensation, locals believe, because, they say, the state is trying to undermine mass support for its armed guerrillas and "Islamic resistance" to Israel.

Hezbollah Secretary-General Hassan Nasrallah accused the government of delaying compensation in a speech marking the 14 August one-year anniversary of the ceasefire. He said the state had received US$1 billion to help those harmed by the war. "This $1 billion is the right of the people and their rights must be given to them," he said in a televised address.

Hezbollah had paid for rents, furniture and repairs, and helped farmers, fishermen, businesses and transport workers, altogether to the tune of $381 million. Rent payments would be renewed, Nasrallah added.

"What Nasrallah said about us withholding aid is not true," said Roula Hammadeh of the government's Higher Relief Council agency. "Not all the money pledged for rebuilding was received. This is a political accusation." The government's spreadsheet showed it received $705 million from Arab states and $496 million from foreign donors in grants for reconstruction.

South Beirut

Complications have arisen in the southern suburbs of Beirut, where owners voluntarily transferred power of attorney and compensation to Hezbollah's Waad Project to facilitate rebuilding. Without the state payments, rebuilding is on hold.

Nasry Abdelnour of Khatib and Alami, a building company contracted by the government's Higher Relief Council, said legal pitfalls had beset the suburbs. "Many are slow to present necessary papers proving legal ownership because they did not register their apartments," he said. And there are often 30 owners in a block of flats. "That is why the southern suburbs are lagging behind."

Roula said the government had set up accounts in the names of all recipients and second installments for southerners were "on the way".

"Thank you, Iran"

Some countries assumed projects directly, rather than through the state. Qatar adopted some of the worst-hit border villages, Bint Jbeil Aita Shaab, Ainata and Khiam, and the UAE is rehabilitating schools. Iran has been one of the main rebuilders.

According to an Iranian source close to the mission, Iran took on 1,300 projects, including rebuilding mosques and churches, 13 bridges, roads and hospitals and creating parks throughout the south.

Signs in English and Arabic announcing "Thank you, Iran" are draped across gleaming buildings in many villages, amid clouds of dust and the din of construction.

Sitting on a bench beneath drying tobacco sheaves, a woman who gives her name only as Umm Hussein says she refused the government's compensation offer for her heavily damaged home, in the small town of Srifa, across the valley from Ghandourieh. Across the street, tents are visible on some roofs, above piles of rubble.

"Hezbollah gave us $1,000, my husband paid $5,000 from his own pocket and the government offered us just $670," she says. "It was an insult. The government is punishing us for being with the resistance."

Widow Khadija Malkani points to the bullet marks in her walls, the cracked ceilings, holes in the walls and the unsurfaced floor of her one-bedroom home. "We received $4,000 and finished one room with it," she says, and there was not enough to do the roof, which lets in water.

"We're surviving for now, but winter is cold here and I don't know how we'll cope," she said.

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