A suicide bomber from Islamic Jihad, a Palestinian militant group, blew himself up at the doors of a crowded shopping mall here Monday, killing at least five people.
The blast shatters the relative stability that has reigned since Israelis and Palestinians reached a deal on border crossings with US assistance last month.
It also raised the prospects that extremists opposed to peacemaking might ratchet up violence against civilians, complicating plans to hold Palestinian elections at the end of January and pushing the Israeli electorate further to the right when it goes to the polls in March.
Israeli Prime Minister Ariel Sharon, who withdrew from the Gaza Strip this summer after a 38-year occupation, has said that Israel would make no further concessions to Palestinians until their leadership reins in terrorism.
Now, observers say, he will be waiting to see whether Palestinian Prime Minister Mahmoud Abbas - who condemned the bombing - moves as promised to clamp down on groups such as Islamic Jihad and Hamas.
"What happens will depend in part on the government response to those terror attacks," says Yair Sheleg, a columnist for the Haaretz newspaper and a fellow at the Israel Democracy Institute.
"If there is an era of terror, it serves Sharon, especially against Amir Peretz," says Mr. Sheleg, referring to the Labor Party leader who is currently the key challenger to Sharon in the March elections. A return of violence against Israelis could play into the hands of ultrahawkish contenders who plan to run against Sharon, such as former premier Benjamin Netanyahu, who is favored to lead the Likud party.
"Especially if there is terror," adds Sheleg, "people won't worry about economics because the issue will be security, and that [wins support for] both Sharon and Netanyahu. If the government responds in a tough way, so that Sharon can show he has zero tolerance for terror, that will probably help him. And if he has a weak response, it can help Netanyahu."
In Netanya, the blast shattered sections of the mall's facade, where the bomber was stopped, noticed by security guards because he was walking with his hand inside his bag, ready to detonate.
Shai Yamin, a restaurant owner who witnessed the blast, showed a certain war-weariness in a city that has seen a number of devastating suicide bombings since the second intifada broke out five years ago.
"I saw it with my own eyes. My stomach is still churning," says Mr. Yamin. "It doesn't matter which kind of government we have, whether a right wing of left wing government. Assume we do everything they want, assume we close a peace deal with them. Will it matter? I don't believe it will stop."
Officials in Jerusalem, however, say the violence is stoppable if Mr. Abbas works to disarm militant groups and break the infrastructure that enables bombings to happen. "We've been feeling that we're on a positive track, and when this happens, it's a throwback to the difficult period of 2002 and 2003," when there were sometimes several bombings in a week, says Mark Regev, a spokesman for the foreign ministry.
Abbas said in a statement that the Palestinian Authority condemns the attack and "will chase all those were responsible and behind carrying it out."