Four suicide bombs, killing more than 50 people, have reignited the hatred between Israelis and Palestinians and come close to capsizing the peace agreements. "Somewhere in the depths of the military bases," writes Meir Shalev, author of historical and satirical novels, "the rubber bullets are being put in their clips, the clubs are being stuck in belts and tear gas is available once again."
As it became clear last week that the right-wing Likud bloc might be the next leaders of Israel, Mr Shalev wrote in the daily Yedioth Aharanoth that he felt as if he was having a recurring nightmare. Professional counter- terror experts were suddenly back in business, claiming they would "rip out terror by the root" and "crush the head of the viper". He foresees Israelis returning to familiar occupations like army reserve duty in Gaza, guarding prisons, searching houses and chasing after children.
Already it is like a return to the days of the Palestinian intifada. Only three months ago Israeli troops were moving out of their barracks and bases in the West Bank, and Palestinians believed the military occupation they have endured since 1967 was ending. But since the bombs started two weeks ago, all this has gone into reverse. On the West Bank the army has imposed a state of siege on seven Palestinian towns and 465 villages more rigorous than anything seen since the Gulf war in 1991.
In Gaza there is already a shortage of flour and sugar, and yesterday the Israeli navy imposed a blockade to prevent fishermen going to sea. "No one goes in and no one goes out," says Major-General Ilan Biran, a senior army commander.
The aim of the Labour government is to pressurise Yasser Arafat into arresting all leaders and activists in Hamas, the Islamic organisation from which the bombers come. Yesterday he fired Jibril Rajoub, his security chief and most important lieutenant on the West Bank, presumably for his failure to prevent the bombings.
The government also wants to reassure Israelis by very visible security measures. In Jerusalem last night there were soldiers at every bus stop as Israelis waited to see if, for the third Sunday running, a suicide bomber would blow himself up during the early morning rush hour. "I feel frightened every time I go near a bus," said one driver. "I don't believe there is any way of stopping somebody who intends to kill themselves."
And as the fear and rage of the population grows - and its impact on government policy increases - the situation threatens to get a great deal worse.
Mr Peres has so far resisted calls to send the army into Gaza and the newly autonomous Palestinian enclaves on the West Bank, knowing that this would torpedo the agreements reached with Mr Arafat and the PLO in the last three years. He is prepared to blow up the houses of the families of suicide bombers, but not to bulldoze whole villages, as suggested by one minister. In this he is supported by the army commanders, who do not want to fight their way into Gaza and Palestinian cities. As one retired officer told a newspaper: "In times of crisis our role is to restrain the politicians. When the blood boils they get all kinds of contemptible ideas."
The main plank of government thinking at the moment is an economic siege of the 2.3 million Palestinians in the West Bank and Gaza. If they're squeezed hard enough, the reasoning goes, they will want to get rid of Hamas themselves. The problem is that Israelis, who will vote for a new government in May, want more spectacular revenge for the people who died in the Dizengoff Centre in Tel Aviv and the buses in Jerusalem.
Mr Peres has promised that there will be deportations of Hamas leaders and sympathisers, possibly to Sudan, though this did not work too well when tried four years ago. Palestinians expect arrests and deportations, while a poll yesterday showed that 94 per cent of them opposed military action against Israel.
But the real danger is if Israel goes beyond this - for example, with a campaign of retaliatory assassinations. "We will hit Hamas leaders," said Binyamin Ben-Eliezer, the Housing Minister. Taken literally, that means Israeli hit squads will start killing Hamas members, as they did Yahya Ayyash, the master bombmaker, with a booby-trapped mobile phone in Gaza on 5 January.
That would almost certainly result in another spate of suicide bombs. Hamas and Islamic Jihad, the two organisations behind the attacks, have adopted the motto: "They shall not die alone." The message is that, in contrast to the intifada, they will retaliate for any of their members killed - and the lesson of the last two weeks is that suicide attacks are almost unstoppable.
Although the majority of Palestinians disapprove of suicide bombs, many young men from the refugee camps do not. Ibrahim, a 17-year-old from Bethlehem, said just after the Tel Aviv bomb: "As a human being I am very sorry to see the young people killed, but the Israelis used to do the same thing to us."
Even if there are no more attacks, the prospects for peace look bleak. In a few days the picture has changed entirely from January, when the government took two gambles. Mr Peres decided to call the election six months early, after finding that the polls showed that the Oslo accords were popular. The army withdrawal from the West Bank towns had gone smoothly; so had the Palestinian elections.
At first he appeared to have made the right move. He was 16 per cent ahead of Binyamin Netanyahu, the Likud leader, But the second gamble - about how limited the retaliation for the death of Ayyash would be - clearly failed. It went beyond what anyone in the government had expected.
Today Mr Netanyahu is 3 per cent ahead. He has put together a right-wing coalition which is favoured to have a majority in the Knesset. Victory would effectively mean the end of the Oslo accords, which are opposed by Likud. He says he would not "send Israeli tanks back into the towns"; instead he would insist on strict implementation of Oslo. This sounds better than straight rejection in the ears of Israeli voters and at the American embassy in Tel Aviv, where, say other diplomats, the betting is on a Likud victory in May. But Mr Netanyahu reveals his true attitude by saying he will refuse to meet Mr Arafat, elected Palestinian president in January, if he becomes prime minister.
"As soon as they get into power they will start a series of quasi-legal actions in theory aimed at implementing Oslo but in fact aimed at destroying it," argues one Israeli political observer. He says the difference between now and three weeks ago is that today "enough Israelis are prepared to fight a mini-war to take back the occupied territories. You could get 200,000 reservists in the army to fight. You could not have done that before the suicide bombings."
Mr Netanyahu, who became leader of Likud in 1993 primarily because of his skills on television, does not want to frighten his potential supporters by visions of more suicide bombs. His slogan is "Peace with Security". But his chief lieutenants are more forthright. General Ariel Sharon, the former defence minister who ordered the disastrous 1982 invasion of Lebanon, said last week that in fighting Hamas "the campaign must be conducted without any regard for any Oslo pact restrictions. The agreement, which places severe restraints on us, prevents effective struggle against terrorism."
Gen Sharon might not be defence minister in a Likud government. This post is believed to be promised to Gen Rafael Eitan, chief of staff during the invasion of Lebanon, who once compared the Palestinians on the West Bank to "drugged cockroaches in a bottle". The Israeli government's own commission on the massacre of 800 Palestinians at Sabra and Chatilla refugee camps in Beirut in 1982 said it would have recommended that Gen Eitan be forced to resign if he had not been retiring from the army.
Under Likud, Israel repeatedly failed to resolve any of its problems with the Palestinians and its Arab neighbours by military means. And the intifada, starting in 1987, showed that the two million-plus Palestinians in Gaza and the West Bank could not stay indefinitely under military occupation.
None of Likud's recipes are new. Most have been tried and failed before, but few of the leadership appear to have learned anything in the years they were in power from 1977 to 1992.