Implicated by a United Nations inquiry into the killing of Lebanon's former Prime Minister Rafik al-Hariri, Baathist Syria is isolated and fighting for survival.

"This is another nail in the coffin of the Syrian regime," said Volker Perthes, director of the German Institute for International and Security Affairs and an expert on Syria.

"The regime is definitely shaken because it is better documented now what everybody has suspected in Lebanon and also in Syria ... that Syria was involved in one way or another."

A UN report published on Thursday named Syrian President Bashar al-Assad's powerful brother-in-law and other senior Syrian and Lebanese security officials in the February 14 assassination that re-drew Lebanon's political landscape.

The revelations came as little surprise after months of speculation that German prosecutor Detlev Mehlis's inquiry would blame Damascus, but that does not ease Assad's dilemma.

Analysts say he could try to defuse the crisis by handing over any Syrians indicted and submitting to long-standing US demands that Syria stop foreign fighters crossing into Iraq and expel Palestinian militant groups based in Damascus.

Or he could dig in and face mounting pressure that could imperil the Baathist system in power in Syria since a 1963 coup.

Assad told CNN in an interview last week he was willing to cooperate over Iraq, insisting he did not order Hariri's murder and saying any Syrians involved in it would be considered traitors and would face Syrian or international justice.

Yet on Friday Damascus denied accusations aired in the UN report and criticised the investigation as politicised.

"They are in denial. They say it's politicised. I don't see how they can get out of it," said Nadim Shehadi, a Lebanese analyst at London's Chatham House. "I also don't see how the international community can have a clear strategy of what to do with Syria. There are many regional implications and unknowns. If we are talking about regime collapse in Syria what is the strategy after that collapse?"

The UN Security Council meets tomorrow to discuss what to do next. Some analysts say splits could emerge.

The United States and its allies appear to be laying the ground for economic sanctions against Damascus, which was forced to end its 29-year military presence in Lebanon in April amid intense international pressure.

But analysts suggest European countries would be reluctant to impose such broad sanctions before a court of law proves Syrian involvement and fear an Iraq-style slide into lawlessness if the Damascus government crumbles.

"The debate as this moves to the Security Council will be how far do we want to push this?" said Joshua Landis, assistant professor of Middle Eastern Studies at Oklahoma University.

"Can we develop a stick to threaten Syria with to get the kind of changes we want without making that stick so big that it's going to break the back of the Syrian regime?" — Reuters