Economic sanctions in Iran mean the Islamic republic had to cut funding for Hezbollah in Lebanon, Israeli intelligence assessments state.
Tehran cut its funding to Hezbollah by more than 40 percent in part because of pressure from international sanctions, The Jerusalem Post reports.
Iran usually gives Hezbollah about $1 billion per year in direct military aid that the Shiite resistance movement used to buy weapons and set up military positions in Lebanon, the report added.
According to intelligence reports, the budget cuts are coupled with tensions between top officials in Hezbollah and members of the elite Iranian Revolutionary Guard Corps over key leadership issues.
Israel, meanwhile, is bracing for the fallout from a pending indictment by a special tribunal investigating the 2005 assassination of former Lebanese Prime Minister Rafik Hariri. Hezbollah is widely expected to be implicated in the plot, though the group says it has evidence linking Israel to the slaying.
Israeli officials, the Post said, are more fearful that Hezbollah will try to overthrow the government in Beirut than they are of a military assault similar to the 34-day war in 2006.