The report, a draft copy of which was obtained by Aljazeera.net, urges restraint on the part of all parties, both domestic and international, regarding the crisis triggered by the assassination of former prime minister Rafiq al-Hariri in February.
"In a country awash with weapons, accustomed to being a theatre for proxy wars between Arabs, Palestinians and Israelis, and on the verge of a major redistribution of power and resources, the means of and motivations for violence abound," the report issued on Tuesday by the Brussels-based think-tank says.
It advises the United States not to use the crisis to achieve its strategic goals in the region; urges the holding of free elections; and calls for an inquiry into al-Hariri's death.
Focus on pullout
The report also recommends that the UN keep the emphasis of Resolution 1559 on the section concerning the withdrawal of Syrian forces from Lebanon.
The assassination of al-Hariri and the withdrawal of the Syrian military under pressure from the US, has plunged Lebanon into uncertainty.
The ICG report says Damascus is
isolated and feeling threatened
Lebanon has been without a government since demonstrators forced out Prime Minister Umar Karami's cabinet from power six weeks ago.
The country's leaders have since been unable to form a new government necessary to hold elections in May.
The ICG report says these important polls should be held on time. Separately, the report's author Reinoud Leenders told Aljazeera.net it could be part of the pro-Syrian Lebanese politicians' strategy to delay them.
"My guess is that they have a lot of interest in delaying the elections. The more obstacles they raise, the more likely the opposition becomes divided," he said.
"Some elements are trying to cause havoc. So I don't think it's positive"
ICG Lebanon report author
With regard to the recent bomb attacks in mainly Christian areas of Lebanon, the ICG says this is a worrying sign.
"Some elements are trying to cause havoc. We have seen bomb attacks and there are rumours that some groups are receiving arms. So I don't think it's positive," Leenders told Aljazeera.net.
As far as Syria is concerned, the ICG says the country is becoming increasingly isolated from the international community, and warns that the Syrian government may see the withdrawal from Lebanon as a threat to its stability.
"The Baathist regime is more isolated than ever, on the verge of losing a major regional asset, and with serious questions about how long it can survive," the report says.
Syria says it will complete its
pullout from Lebanon by April
The ICG cautions against a resultant backlash against Lebanon and the wider region.
"Seen from Syria's vantage point, the sudden excitement over Lebanon's sovereignty is just the latest US ploy to destabilise it and usher in a new regional order. Although significantly weakened and isolated, its regime retains instruments and allies to create havoc in the region," the report concludes.
End of influence?
Damascus has said it will complete a full withdrawal from Lebanon by the end of April, but the think-tank doubts Syrian influence over its neighbour will end.
Talking to Aljazeera.net, Leenders said: "There are widespread reports of Syrian intelligence readjusting their strategy to the change of circumstances. There are reports of them moving out of their headquarters and into private apartments. These are indicators that the Syrians are not going to give up so easily."
"I am not so sure that even the opposition, when they get into power, will not be so reluctant to hook up with Syrian businessman"
ICG Lebanon report author
He also said economic relations between the Syrians and the Lebanese will remain strong.
"I am not so sure that even the opposition, when they get into power, will be so reluctant to hook up with Syrian businessman," Leenders said, alluding to opposition leader Walid Jumblatt's reported ties with Syrian business people.
Additionally, the ICG report recommends the integration of the Lebanese Shia group Hizb Allah into the national army; the establishment of normal diplomatic relations between Syria and Lebanon; and Washington's non-interference in any decision on the Hizb Allah's final status.