(recast after commission news conference; adds speech by U.S.) By Stephanie Nebehay GENEVA, Dec 1 (Reuters) - A United Nations human rights inquiry said on Friday that Israel should be made to pay compensation for damage caused by its month-long war in Lebanon, especially losses incurred by civilians. It suggested setting up an international compensation programme similar to the one which has paid out billions of dollars to cover losses due to Iraq's 1990-91 invasion and occupation of Kuwait. But the three-member commission of inquiry -- which also rejected Israeli and U.S. charges that its recent report accusing Israel of "flagrant violations" in the war was one-sided -- left any decision to the U.N. Human Rights Council. "It should consider creation of a commission competent to examine individual claims for reparations and compensation...," commission member Joao Clemente Baena Soares told a briefing. The inquiry team was expanding on its Nov. 21 report which said Israel was guilty of "excessive, indiscriminate and disproportionate use of force" in the July/August war, which it said caused 1,191 deaths in Lebanon and damaged 30,000 homes. Israel invaded southern Lebanon after Hezbollah captured two Israeli soldiers in a cross-border raid on July 12. The report said Israel had also suffered serious casualties from Hezbollah attacks, including 43 civilians killed and 6,000 homes damaged. Commission member Stelios Perrakis said Lebanon's fishing and farm industries had been damaged by Israeli attacks, and oil spills from refineries had reached Cyprus, Turkey and Greece. The inquiry had established that Israel bore international responsibility for the violations and damage, he said. "If the Council, the international community, wishes to set up a mechanism, I remind you that the Security Council established a commission on Iraqi reparations for Kuwait. Why not also a commission for Lebanon?," Perrakis told reporters. The U.N. team visited Lebanon to assess the situation in line with its mandate from the rights forum to probe "systematic targeting and killing" of Lebanese civilians by Israel. "Of course it (the report) was not one-sided, it was within the limits imposed by the mandate," Perrakis told reporters. "REPORT RIFE WITH IMBALANCES" But Israel took the floor at the Council to denounce the U.N. investigation, saying it had ignored Hezbollah guerrillas who fired 4,000 rockets at Israel during their 33-day war. Itzhak Levanon, Israel's ambassador, said the commission had produced a "report rife with imbalances and misrepresentation". He said that the U.N. report was wrong to turn a blind eye to "Lebanon's obligations to prevent the use of its territory for hostile acts and to disarm and disband Hezbollah". Israel had been forced to act in self-defence, confronted by "Hezbollah terrorists on one hand, who deliberately made every effort to create civilian casualties on both sides, and its own forces on the other hand, who were committed to making every effort to minimise them", according to the Israeli envoy. U.S. ambassador Warren Tichenor said: "No report can be credible that attempts to find facts and draw conclusions about an armed conflict without examining the actions of both sides."
