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CASUALTIES UP AS LEBANON FIGHTING GROWS

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Israeli forces and guerrillas of the pro-Iranian Party of God exchanged artillery and rocket fire Friday in some of the heaviest fighting in southern Lebanon this year. Two Israeli soldiers and two Lebanese police officers were reportedly killed, and seven Israelis were wounded.

After years of relentless fighting in southern Lebanon, where Israel controls a border strip that it calls its "security zone," the Israeli army and its allied Lebanese militia have begun suffering significantly higher casualties.In just the last two and a half weeks, six Israelis and eight militiamen were killed, and more than two dozen others were wounded.

Before December, Israel this year had averaged one or two deaths a month in the buffer strip, which is designed to forestall attacks on Israeli towns along the only border where Israelis and Arabs still have an active battlefront.

Israeli experts say Shiite Muslim gunmen from the Party of God are showing new sophistication and skill in their attacks. Also, there are more Israeli soldiers patrolling the security zone now, making more of them front-line targets.

News reports from Lebanon say Israel has had to strengthen its force there because of declining morale and desertions in the militia that it pays and trains, the South Lebanon army.

"There's a war of attrition in southern Lebanon," said Environment Minister Yossi Sarid, a senior Israeli negotiator in peace talks with the Palestinians. He added: "We should take the initiative. The initiative should not be left in the hands of our enemies."

In the combat Friday, Shiite guerrillas struck hard with artillery, rocket and machine-gun fire at Israeli outposts at Dabsheh and Suweida, on the northern fringes of the buffer zone.

In retaliation, Israeli planes were reported to have fired rockets at Party of God targets in Melita and Jabal al-Rafia, about 25 miles south of Beirut.

There were no reports of guerrilla casualties. But an Israeli helicopter was said to have made a direct missile hit on a Lebanese police jeep a few miles north of the zone, killing two officers.