Yellow Hezbollah banners flutter throughout the hilltop villages of southern Lebanon where Mohammed Ghosen, a portly 32-year-old, has helped build the party into a political and military authority over the years.

Hezbollah-funded schools and hospitals serve thousands of the region's mostly poor residents, who revere the party and its still active armed wing for ending the Israeli occupation of southern Lebanon more than four years ago. The national government has only a token presence here, with a few army checkpoints.

"We have ideology and support," said Ghosen, a Hezbollah activist for more than half his life. "Our success can be seen in the peaceful existence between the Lebanese army and the military wing of Hezbollah."

But relations between Hezbollah and many Lebanese are growing more strained by the day.

A debate over the nature of Hezbollah and its long-term goals in Lebanon has been reignited in the past few weeks. Dormant since the end of the country's civil war 15 years ago, the debate is now bringing pressure on the party to give up the arsenal that once made it a heroic symbol in the Arab world. The outcome could determine whether Hezbollah remains one sectarian party among many, or realizes its early leaders' vision of creating an Islamic state.

Leaders of Hezbollah -- which emerged during the Lebanese war and played key roles in the kidnapping of Americans and the bombings of the U.S. Embassy and Marine barracks in Beirut in 1983 -- have said they are committed to achieving their populist political agenda through democratic means. But a growing number of Lebanese politicians said they feared three factors -- the party's demographic clout, a potent arsenal that includes guns, rockets and a new drone spy plane, and authority to operate largely as an independent government in southern Lebanon -- were fueling broader ambitions.

Concerns Over Clout

Although Lebanon has not conducted a national census since the 1950s, many analysts said an up-to-date count would show that most of Lebanon's 4 million people were Shiites. Not all Shiites are loyal to Hezbollah. But Western diplomats and political analysts said the party's highly developed organization, reputation for clean government and populist message would make it a strong contender for national leadership in any election unbound by the current power-sharing system of governance that brought an end to years of sectarian civil strife. Hezbollah leaders have begun openly criticizing that system, which apportions the country's top political jobs based on religious affiliation.

Concerns over Hezbollah's place in Lebanese society reemerged in August when party leaders backed a three-year term extension for President Emile Lahoud, a move pushed by the Syrian government. Syria and Iran are Hezbollah's chief foreign patrons.

During the debate, the U.N. Security Council approved a resolution sponsored by the United States and France demanding that "all Lebanese and non-Lebanese militias" be disarmed, a tacit reference to Hezbollah. But party leaders said they had no intention of doing so while Israel occupied Lebanese land, contending Israeli troops were in the disputed 100-square-mile Shebaa Farms below this hilltop town on the southern border. Israel held onto the hilly land after its May 2000 withdrawal from southern Lebanon as a security buffer, something it says it needs because Hezbollah and Palestinian militias operating from refugee camps occasionally fire rockets into Israeli territory.

Thousands of anti-Syria and anti-Hezbollah demonstrators took to the streets Nov. 23 in Beirut, the capital 40 miles northwest of here, chanting, "The only army we want in Lebanon is the Lebanese army." Most of those taking part were Christian opposition groups concerned about Hezbollah's armed clout. A raucous counter-rally followed a week later, carried live on Hezbollah's satellite television channel, al-Manar. The State Department Friday classified the channel as a terrorist organization, like its sponsors.

Hezbollah leaders, in addition to holding their own rallies, have sent more subtle reminders of their demographic power. During the debate over Lahoud's term extension, Hezbollah Secretary General Hassan Nasrallah recommended that the matter be put to a popular vote.

"As long as they receive money from Iran, as long as they believe they can turn Lebanon into an Islamic society, then we have a real problem with Hezbollah," said Gebran Tueni, a Christian, who is the publisher of al-Nahar, Lebanon's most influential newspaper.

Ties That Bind

The al-Janoub Hospital in the southern city of Nabatiyah sits across from a Shiite mosque, the Zahar Boutique and Yassine Chicken, whose smells waft into the spotless waiting room. A photograph of the late Ayatollah Ruhollah Khomeini, leader of the Shiite revolution in Iran, hangs on the wall above the receptionist, a woman cloaked in black.

The 30-bed hospital opened nearly a decade ago, at a time when southern Lebanon was the battleground in a war pitting Hezbollah and another Muslim militia against thousands of Israeli troops and the South Lebanon Army, a mostly Christian militia aligned with Israel. Today 50,000 patients pass through its wide halls each year, regardless of their political affiliation. The hospital receives $100,000 a month from Hezbollah, which is expanding its 50-hospital network into northern Lebanon.

Ahmad Saad, the hospital's director and a member of Hezbollah's national health committee said the party was only filling a public need left by the Lebanese government's inability to provide sufficient health care for the region.

Along the roads of southern Lebanon, pictures of young men killed during the conflict appear on nearly every lamppost, bearing the Hezbollah emblem. Twisted Israeli army trucks are left at roadside shrines, yellow flags flapping atop them.

In the stony hills outside Nabatiyah, a portrait of Syrian President Bashar Assad appears along the narrow road, a reminder of Syria's influence . One Western diplomat in Beirut called Syria "the traffic cop" that allows money and weapons to flow to Hezbollah. Despite broad ideological differences, Syria and Hezbollah share a common foe in Israel.

The Syrians "benefit from the availability of an armed resistance in Lebanon, and we benefit from their need for armed resistance," said Mohammad Raad, leader of the Loyalty to the Resistance Bloc, Hezbollah's 12-seat coalition in Lebanon's 128-member parliament. "But we are not fighting in the interest of others. We are fighting for our own cause."

Western diplomats and political analysts in Beirut estimated that Hezbollah received $200 million a year from Iran, which views the party as its bridge to the Arab world.

Raad said money from Iran came only through private charities to be used for health care, education and the support of war widows. Hezbollah's main sources of income, he said, are the party's investment portfolios and wealthy Shiites.

"It's indisputable that the electoral system in Lebanon is not a fair one," Raad said. "It's essential that this system be changed, but change in Lebanon is a very difficult challenge because there is no such thing as a Lebanese public opinion."

Many of Lebanon's religious parties are remnants of the militias that fought in its civil war. All have disarmed -- at least officially -- except Hezbollah. The party was allowed to keep its guns under somewhat ambiguous language in the postwar constitution -- a document adopted in 1991 and endorsed by the United States -- because of the Israeli occupation in southern Lebanon at the time.

The Israeli army's presence at Shebaa Farms and the party's fighters who remain in Israeli prisons are Hezbollah's justification for its militancy along the border.

Last month Nasrallah, the party leader, announced that Hezbollah had breached Israeli airspace with a reconnaissance drone called the Mirsad-1.

Party leaders warned that the drone, whose name means Observer, could be used to bomb Israeli towns. Lebanon's defense minister attended an event for the announcement and joked that he wanted one for the Lebanese armed forces. Nasrallah replied that Hezbollah would provide one free of charge.

"The sooner they become part of the legitimate Lebanese armed forces, the better," said a Western diplomat in Beirut. "I believe in their right to bear arms and defend the country. But I'd feel more comfortable if they were doing so within the state security services."

Hezbollah draws its members almost entirely from Lebanon's rapidly growing Shiite population. But it is striving to attract broader support. It has been reaching into south Lebanon's teeming and violent Palestinian refugee camps, home to a mostly Sunni population whose youth still view Hezbollah's past guerrilla war against the Israeli occupation with awe.

"They don't give us money for nothing, and they want our people and cause," said Khaled Arif, the Palestine Liberation Organization's field coordinator for south Lebanon who is based in the notorious Ain Helweh camp, where Hezbollah has offered to improve the water system and build health clinics. "We won't sell them to Iran."

But Hezbollah is not the inclusive movement it contends that it is, at least not to the people living in its territory who are not Shiites. No Hezbollah banners fly in the village of Qlayia, a few miles west of here, where the Rizk family gathered in their stone house on a chilly afternoon to watch television. Like nearly all of the families in Qlayia, they are Maronite Christians.

Pierre Rizk, a middle school math teacher, praised Hezbollah for preventing Muslim reprisals against the region's Christians, many of whom worked inside Israel during the occupation, after the Israeli army pulled back. But he said the party had done little to counter the steep economic decline that followed.

His daughter Manal, 23, has been applying for every government job she hears about, so far without success, largely because she does not have party sponsorship essential in Lebanon's sectarian civil service system.

She was recently laughed out of the employment office at Beirut International Airport when she submitted her resume, featuring a master's degree in psychology, for a position as a baggage inspector.

"Unless you are in line with them politically, no one will take care of you," she said.

Hezbollah militants waved party flags last month during a military parade to mark Jerusalem Day, held at the end of the Muslim holy month of Ramadan, in the eastern Lebanese city of Baalbek. A Hezbollah emblem is displayed atop a wrecked Israeli military truck in southern Lebanon. The group is under pressure to give up its weapons.