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* Bulgaria urges tougher measures against Hezbollah
* Israeli minister says Hezbollah draws financing from EU
By Nicholas Vinocur
PARIS, Feb 19 (Reuters) - A decision by the European Union to blacklist Hezbollah would interrupt the group's financing because much of the money it uses to fund militant operations comes from European capitals, Israel's civil defence minister said on Tuesday.
Bulgaria is pressing the EU to toughen its stance toward Hezbollah after it blamed the Lebanese Islamist movement for a bus bombing that killed five Israelis at a Bulgarian Black Sea resort last year.
The EU has resisted pressure from the United States and Israel to list Hezbollah as a terrorist group, arguing this could destabilise a fragile government in Lebanon and contribute to instability in the Middle East.
The support of Hezbollah, a powerful political and guerrilla Shi'ite Muslim movement that is armed and funded by Iran, is vital to the authority of Prime Minister Najib Mikati.
But Avi Dichter, in Paris to discuss the matter with French officials, told Reuters the EU should blacklist the group because it also drew a large portion of its funds from European capitals and later laundered the money.
"Europe, that's the real base of Hezbollah ... If they won't be able to gather money or to raise finances in Europe, they are going to be in trouble," he said, adding the funding came from a network of charities and front-companies.
Hezbollah fought against Israel in a 34-day war in 2006 after the group captured two Israeli soldiers in a cross-border raid. Some 1,200 people in Lebanon, mostly civilians, were killed and 160 Israelis, mostly soldiers, died.
The results of Bulgaria's investigation into Hezbollah's alleged involvement in the bus bombing are likely to take weeks or months to deliver.
EU diplomats have said their stance on whether to blacklist the group will depend on the evidence Bulgaria produces.
In France, officials also say privately they are concerned that listing Hezbollah as a terrorist organisation could destabilise Lebanon where some 1,000 French peacekeeping troops are deployed following a reduction last year.
"I wish they (France) will be smart enough, brave enough to take a step without thinking how it's going to affect the stability or the lack of stability in Lebanon," said Dichter, a former director of Israel's Shin Bet internal security service.
"Lebanon has so many problems that defining them (Hezbollah) as a terror organisation or not, that's not the key issue."
Sectarian tensions, smouldering from the 1975-1990 civil war, have been re-ignited in Lebanon by the mainly Sunni Muslim revolt in neighbouring Syria against Hezbollah's ally President Bashar al-Assad.
(Editing by Alison Williams)