The emergence of a body of critically acclaimed work from Romania, Israel and Lebanon, has been among the more surprising developments of 2007.

Cannes was a watershed for the three nations.

The Palme d'Or awarded to 4 Months, 3 Weeks & 2 Days, Cristian Mungiu's harrowing drama about an illegal abortion in Ceausescu-era Bucharest, marked the peak of a recent wave of well-regarded Romanian films, notably Cristi Puiu's The Death Of Mr Lazarescu (2005), Corneliu Porumboiu's 12:08 East Of Bucharest (2006) and Cristian Nemescu's California Dreamin' (which premiered in Cannes this year).

The films shared certain characteristics: a formal restraint that favours long, static takes (4 Months' DoP Oleg Mutu shot Lazarescu); a tone of bleak austerity tempered by absurdist touches; and, perhaps most importantly, a probing look at the nation's past, with 4 Months providing a grim picture of the dying days of the Communist regime.

Cannes was a significant launch for key films from Israel and Lebanon. From Israel, Eran Kolirin's The Band's Visit, a gentle comedy about an Egyptian police band stranded in a remote town in Israel, picked up the Un Certain Regard award, and Etgar Keret and Shira Geffen's Jellyfish, an ensemble comedy set in Tel Aviv, earned raves.

And from Lebanon was Nadine Labaki's acclaimed debut Caramel, set in a Beirut beauty salon. The profile of Lebanese cinema was further raised by the Venice success of Philippe Aractingi's Under The Bombs, set during the 2006 Israeli bombardment of South Lebanon.

Crediting the improvement of TV drama and increased government support for film as factors in the robust health of Israeli cinema, The Band's Visit producer Yossi Uzrad acknowledges: 'In recent years, a number of Israeli films have done well at festivals and received critical praise.'

But he cautions against assuming this will translate into international box office: 'A film like Jellyfish did well at Cannes, but it's going to be difficult to sell abroad'.

At San Sebastian in September, Tzahi Grad's Tel Aviv-set revenge drama Foul Gesture was the talk of the town. However, the film has yet to secure a sales agent although the producer has signed several distribution agreements.

Hannah McGill, artistic director of the Edinburgh International Film Festival, warns against judgments made in the 'hothouse atmosphere' of festivals. Acknowledging 4 Months as that rare 'across-the-board choice for Palme d'Or', she argues that 'you don't know a national cinema is significant until it's released before an audience'.

She adds: 'There's a danger about this talk about a great year for Romania - are the public really interested' You have a buzz, but if the films don't make money these new directors might struggle to make their next movie.'

Securing an international audience is crucial for Romanian cinema because of the low levels of local cinema attendance. 'There's no money to make in this market,' says Andrei Boncea, director of MediaPro Pictures which produced California Dreamin'. '

So a new generation of Romanian film-makers have had to think about films for an international audience or for festivals.' Of the current interest around his national cinema, he adds: 'We're experiencing a media frenzy but that doesn't really translate yet into foreign business and investment.'

The interest of buyers in Romanian cinema will naturally depend on their popularity with foreign audiences - and there seems to be cautious optimism.

Having handled 12:08 East Of Bucharest this year, UK distributor Artificial Eye is set to release 4 Months and California Dreamin' in early 2008.

Philip Knatchbull, chief executive of Curzon Artificial Eye Group, says: 'There's a definite buzz around Romanian cinema right now.' With 4 Months, Knatchbull says: 'We plan to create as much word-as-mouth as possible, building an old-fashioned platform release, with a first-week opening in two London cinemas then going to a minimum of 20.'

Although the critical interest around Romanian cinema has yet to enter the public consciousness, he adds that the high number of Eastern European immigrants to the UK could consolidate numbers.

The focus for foreign distributors is on individual titles rather than building up a sense of a national 'new wave'. Sam Nichols, head of distribution at Momentum Pictures, is handling the UK release of Caramel, which her company picked up in Cannes. 'It feels like Lebanese cinema is having a massive profile right now,' she says.

But while Caramel's Lebanese backdrop is a 'positive point of difference, in that it doesn't play up to the country's distressing image', Nichols underlines the movie's universality. Having studied the film's successful release by Bac Distribution in France, where it has grossed $3.8m, she says her 'strategy is to get people in, and as soon as they're in we know they're going to love it. It's a discovery film.'