Ongoing tensions along the Israel-Lebanon border, including sporadic airstrikes and ceasefire violations into August 2026, reinforce trader expectations against full diplomatic normalization by the end of the year. A June 2026 U.S.-brokered trilateral framework agreement advanced security steps such as Israeli withdrawal from southern Lebanon, Lebanese Armed Forces deployment, and phased Hezbollah disarmament, while affirming peaceful neighborly relations. However, Hezbollah rejected the accord outright, Lebanese officials tied deeper ties to the 2002 Arab Peace Initiative requiring Palestinian statehood, and ongoing Rome talks have centered narrowly on implementation rather than embassies or formal recognition. Limited domestic support in Lebanon for normalization and the short timeline before 2027 sustain the 90% implied probability on no.