JERUSALEM — ISRAEL yesterday hailed what it called the allies' ``glittering victory'' over Saddam Hussein. In the streets, drivers honked their car horns in relief as the government lifted a state of emergency that had existed since the start of the Gulf war. But, while Israelis began to dismantle their sealed rooms and put away their gas masks, officials looked anxiously to the coming days and weeks, voicing fears that the post-war era might hold dangers for the Jewish state.
Israel now faces a twin prospect: the continued existence of Saddam in power in Iraq, and the arrival, as early as next week, of US Secretary of State James Baker III. His trip is designed to tackle some of the region's outstanding issues, notably the Arab-Israeli conflict.
``We certainly welcome the glittering victory of the United States and its allies over Saddam Hussein,'' Deputy Foreign Minister Benjamin Netanyahu told Army Radio. But, Mr. Netanyahu continued, ``As long as the allied armies remain on Iraqi soil, we must demand the destruction of the entire missile system.''
The chief of staff, Lt. Gen. Dan Shomron, said Wednesday that it was ``never too late'' for Israel to retaliate against Iraqi missile sites in Western Iraq. Netanyahu said there would be no need for Israeli action if coalition forces completed the task first.
But if the Scud missiles that brought the Gulf conflict to the streets of Tel Aviv remain a source of concern, Israel may face stiffer challenges in the near future.
``Israel will wake up tomorrow morning very sober,'' an official, who requested anonymity, said yesterday.
The dizzying pace of events in the Gulf yesterday seemed to have caught even the unfailingly alert Israelis by surprise. Officials who had looked forward to a day off for the Jewish holiday of Purim, hastily returned to government offices to take stock of the latest developments.
``It's failure if Saddam Hussein stays on,'' an official said yesterday. And earlier in the week, Prime Minister Yitzhak Shamir warned that the interests of Israeli security would be best served if Saddam Hussein were to ``disappear from the international arena.''
Another member of the government, the Science and Energy Minister, Yuval Ne'eman, went further. ``The allies must bring about the collapse of Saddam Hussein's rule,'' he said.
This may yet happen. But Israelis are already grappling with the possibility that it will not.
``The coalition forces will go away. We will stay here,'' a source said. ``This is a bad neighborhood. We have to carry on living with bad neighbors.''
Baker's visit raises other questions. Israeli leaders wonder what proposals the Secretary of State will be carrying. The last time Baker devoted his energy to gaining a breakthrough on the Arab-Israeli conflict, the subsequent political row brought down Israel's coalition government.
An impasse was reached when the Secretary of State tried to bring about a meeting between Israelis and Palestinians based on the Israeli government's May 1989 initiative, which called for elections in the occupied territories to appoint a Palestinian delegation for later negotiations.
The Shamir government still stands by the May 1989 peace plan, but insists that for any peace process to start, Arab neighbors should first end the state of war with Israel and come to terms with the existence of a Jewish state in the Middle East.
Washington would clearly like this to happen too, but the Palestinian issue is still thought to be high on Baker's agenda. Israeli officials privately admit Baker's priorities may differ from Mr. Shamir's, resulting in new tensions between the two countries.
Certainly anything that smacks of territorial compromise is likely to receive short shrift. Shamir, while admitting that Israel had to prepare for ``serious negotiations,'' made this plain to reporters earlier in the week.
``The world knows well enough that [the ruling Likud party] is immune to all pressure,'' Shamir said.
``The Likud believes that there is no reason to give territories and parts of the map of the land of Israel in order to achieve peace.''
Israel's policy of restraint in the face of repeated Iraqi missile attacks may have won it an unfamiliar degree of international sympathy. But the government would like to see such sympathy translated into hard cash.
Officials were angered by Japan's decision not to include Israel on its list of aid recipients among ``front-line'' Middle East states. Washington is also less than enthusiastic about Israeli demands for increased economic and military assistance.
``Once this euphoric morning is over,'' a well-placed source in Jerusalem says, ``Israel will realize that there's nothing much to be happy about.''