WAZZANI, Lebanon, October 16 (IslamOnline & News Agencies) - Lebanon inaugurated on Wednesday October 16, the Wazzani water project in the south, near a spring within Lebanon's borders, in the presence of European and U.N. envoys, despite Israeli threats it could be grounds for war.

"In the name of the Lebanese people, I declare the opening of the pumping station," said Lebanese Chamber of Deputies Speaker Nabih Berri, prompting applause from a crowd of more than 7,000 officials and citizens attending the ceremony, said Agence France-Presse (AFP).

After the release of red and white balloons into the sky, Berri started the pumps and the crowds cheered when Lebanese President Emile Lahoud drank fresh water from the palm of his hand.

The project aims to provide water to villages in southern Lebanon from the Wazzani river, which indirectly flows into the Sea of Galilee, Israel's main source of fresh water.

Just minutes after the inauguration ceremony, Israeli Foreign Minister Shimon Peres said Israel would not tolerate any unilateral measures by Lebanon to “siphon off” key water reserves.

"We do not and will not tolerate unilateral measures and (Israel) reserves the right to defend its water resources in line with international law," said Peres.

"This affair could set off a regional conflict over water resources and the unilateral measure taken by Lebanon could lead to a serious escalation between Lebanon and Israel," Peres added.

"I don't think that is what Lebanon wants but I suspect that is what Hezbollah wants," he claimed.

Israeli Prime Minister Ariel Sharon warned last month that the project could be a "casus belli."

The issue was expected to come high on the agenda of talks Sharon will hold later Wednesday in Washington with Bush.

Asked about the Israeli threats, however, Lebanon's Prime Minister Rafiq Hariri told reporters Wednesday that "the assurances that have reached us go in the opposite direction."

"The language of reason has prevailed," said Hariri, adding "the Wazzani water pumping is a victory for Lebanon, its diplomatic efforts deployed with the help of the United Nations, the United States and the European Union."

Since Sharon threatened war over the issue, U.S. State Department hydraulics expert Charles Lawson has been meeting with officials on both sides in an effort to prevent an escalation.

But the war of words between Lebanon and Israel seems to have toned down in recent days with mediation missions to the region by the United Nations, the United States, the European Union and Russia.

In Cairo, Arab League Secretary General Amr Moussa congratulated Lebanon on the opening of the water project and pledged the support of the league's 22 members in the face of Israeli threats.

"The Arab League expresses its support for Lebanon's right to exploit its natural resources," he said in a statement, urging the international community to press Israel "to halt its threats and violations of Lebanese sovereignty."

The inauguration was attended by Lebanese political and religious officials as well as representatives from the United Nations, the European Union, France, Britain and Russia.

Washington decided to boycott the ceremony "in keeping with our position that unilateral action by either party undermines efforts to reach an understanding," a U.S. diplomat told AFP on condition of anonymity.

"We very much want the dispute to be solved peacefully and fairly. To that end we continue to work closely with the governments of Lebanon and Israel in conjunction with the U.N., the E.U. and others," the diplomat added.

A spokesman for the British embassy said the "E.U. supports the economic development of the south."

The European Union on Monday October 14, offered a comprehensive development plan for southern Lebanon to help ease the crisis with Israel, a plan which Hariri said could spread over 10 years.

Last week, Lebanon delivered a report to the U.N. Security Council saying the total amount of water diverted would amount to 10 million cubic meters (325 million cubic feet) a year.