Tel Aviv: Why did a lone gunman shoot 13 people in cold blood in one of the world's gay capitals?

At 10.20pm on Saturday 1 August 2009, a man walked along Nachmani Street, a residential road in central Tel Aviv. He went into the apartment block at number 28 and down a flight of steps to the basement flat, where a song by Blur was playing on the stereo amid the sound of laughter and conversation. There, the man shot 13 people, killing 26-year-old Nir Katz and 16-year-old Liz Trobishi, before returning up the steps and disappearing into the promenading crowds. His identity remains unknown.

Understanding what happened that night is not easy. It might be tempting to assume that such an attack – unprovoked, apparently indiscriminate – was political, somehow connected to the Israeli-Palestinian conflict. But it was not, for the basement flat at 28 Nachmani Street is the headquarters of the Aguda (Hebrew for "association"), otherwise known as Israel's National Association of LGBT, representing the country's Lesbian, Gay, Bisexual and Transgender communities.

As such, this appears to have been a hate crime directed against one of the city's minority groups – but if so, Tel Aviv offers plenty of simpler pickings. Two blocks away on Yavne Street, for instance, is Evita, the city's most prominent gay bar, very loud, very proud, with arty pornography playing on screens visible from the street and an open pavement terrace. By contrast, the Aguda is virtually anonymous. No signs are posted, no rainbow flags fly. A couple of small stickers, on the communal post-box and on the door of the flat itself, say "The Aguda" in Hebrew, with a rainbow flash.

To find it, you'd have to know it was there.

"One morning I stood in front of the mirror shaving, looked myself in the eyes, and told myself: 'Face it: you're gay.'" Mike Hamel, chair of the Aguda, half-smiles at the memory. We're sitting in the basement flat at 28 Nachmani Street. The place is done up like a student dive, with tinsel, dog-eared posters and a shop mannequin. Hamel, his plaid shirt open one button more than might be usual in Britain, talks slowly and carefully as he describes growing up in Tel Aviv in the 1960s. "When it came to building a family, automatically that happened with a woman. The possibility of a deep emotional relationship with a man never crossed my mind."

He tells me how he had been married for 15 years, with three kids, when his wife died of cancer in 1993. "After the initial phase of restructuring my life, my personal needs started to surface," he recalls. "I found myself looking on the internet for a link to the gay world, and became involved in a forum. My first post said how moving it was to hear all these coming-out stories to parents, but has anyone else had to come out to his children?"

The Aguda was founded in 1975 as the deliberately vague Society for the Preservation of Personal Rights: Israel still had laws criminalising sodomy that dated back to the era of the British Mandate. Only in 1988 were those laws finally rescinded – and then only by parliamentary sleight-of-hand, with clauses inserted into unrelated bills and votes called late at night when lawmakers knew right-wing opponents would be absent.

"It is still practically impossible," sighs Hamel, "to pass any law giving rights to the LGBT community. The harshest talk we hear is from ultra-religious politicians [who say things like], 'The state should treat gays in the same way it treated bird flu.'" He shakes his head. "[These are] thinly masked calls for extermination. I cannot totally disconnect this kind of speech from what happened here in August."

Talking to Hamel, his colleague Shaul Gannon, eyewitness Chen Langer, aged 22, and Aguda volunteer Mor Rozen, who is 21, it is possible to piece together what happened that night.

For the first time in more than five years, Gannon had taken Saturday evening off, handing charge of the Bar Noar ("Youth Bar") – an alcohol- and drug-free safe zone for under-18s – to Langer, a supervisor.

Langer arrived at six, opened up, made some snacks. His colleagues – Nir Katz and two others (who wish to remain anonymous) – arrived around 7.30pm. Rozen dropped by, then left to DJ at a party nearby. Langer describes the evening as "regular" until he heard three booms. "It sounded like firecrackers. I thought: 'I'm going to catch the kid who did this.' I went out into the main room and a man was standing there, masked. He pointed a gun at my face, then lowered it and shot me in the leg."

Katz, behind a counter, was already dead. The gunman walked through the room and out on to the rear terrace, firing indiscriminately as teenagers hid under tables and behind furniture. One victim was shot in the neck and remains paralysed. Another reported how the attacker had fired at him but the gun had only clicked. Liz Trobishi – who had been coming to the Bar Noar for around four months, yet who was herself straight – was shot dead. After less than two minutes, the gunman departed.

At 10.22pm Langer called Gannon, who arrived minutes later. "There was blood everywhere," says Gannon. "I saw bodies on the floor, all this mess, and the only thing I could say was: 'Oh God, he shot my microwave.'" He showed me the battered oven, with an entry hole in the door and a ragged exit hole on the left side. It had been standing on the shelf behind Katz.

Problems continued after the emergency services arrived. "We had kids running from hospital rather than tell their parents they were gay," says Gannon. "Some parents cursed their children; others didn't come at all."

Shadows pass over Rozen's face as she describes the aftermath. "This was my private place," she says. "I was here more than I was at home. Someone took it away, and my best friend too."

An engaging, playful city gazing west into the Mediterranean sunset, Tel Aviv has performed the trick of dissociating itself from the country in which it lies. There may be poverty and injustice literally round the corner, but – in a phrase I heard repeatedly – Tel Aviv is a bubble. In a cosmopolitan week there, I sampled Yemeni hummus, Japanese sashimi and Greek sweet-potato pie. Where once the Jewish Shabbat prompted a city-wide shutdown, nowadays many businesses stay open on Saturdays. Kosher restaurants are so sparse that Time Out Tel Aviv specifically names them.

The LGBT world benefits hugely from Tel Aviv's liberality. Yaniv Weizman is a municipal councillor and president of Israel's gay youth organisation, IGY. "Israel is a great place to raise gay children," he says. "They have role models, singers, politicians; the television is very gay. IGY" – he pronounces it "iggy" – "is for young people to see the world through pink glasses."

Remarkably, IGY is supported by the taxpayer. About £16,000 comes annually from national government, with the same from Tel Aviv's City Hall and smaller amounts from another 17 municipalities, funding the grassroots support work being done by 36 IGY groups nationwide.

"Before August," says Weizman, "most people only saw the gay community at Pride celebrations – half-naked, dancing on cars. Then they saw the demonstration [after the shooting] with 50,000 people, the President [Shimon Peres]. Now they know being gay is about more than just dancing."

Weizman holds the tourism brief at City Hall and has made strides to reposition the city, creating a gay section on the official "Visit Tel Aviv" website and inviting the Florida-based International Gay and Lesbian Travel Association (IGLTA) for their 2009 symposium. John Tanzella, IGLTA's president, told me, "It opened my eyes. In terms of gay tourism, Israel matches up very well."

Russell Lord agrees. A consultant for one of Israel's leading tour operators, Lord regularly hosts gay tours of the Holy Land. "What's it like to be gay in Tel Aviv? Well, what's it like to be straight in London? The issue is almost non-existent," he laughs. "I'm living in paradise."

Lord has a unique place in Israeli social history. When in 2003 the Canadian province of Ontario changed its law to recognise same-sex marriage, Etai Pinkas, a leading activist, gathered five couples to fly to Toronto, marry, return to Israel and petition the Supreme Court to recognise their marriages. In 2006 the court ruled in favour, and Lord and his partner Avi Ozeri were the first to have their ID cards altered from "single" to "married".

"I just want it to be normal," says Lord. "I want a young person not to be doomed to a life of sex in the bushes. I want them to live a normal, square life and be gay."

That such a possibility exists rests on a succession of landmark court cases throughout the 1990s that established legal precedents for gay equality in many areas of society. With its openness towards gays in the military, same-sex adoption and anti-discrimination legislation, the legal situation for gays in Israel is at least as good as – if not, in some areas, better than – that in many parts of Europe and North America.

Popular culture also kept pace – even before Dana International, a transgender singer, won Eurovision in 1998. Over the second half of the decade, Eytan Fox – who later directed the crossover gay drama Yossi and Jagger (2002) and The Bubble (2006) about gay life in Tel Aviv – was making Florentin, a Friends-like TV show about the lives and loves of a group of urban twenty-somethings.

"Fox is a hero," says Neal Levy, a writer. "Florentin changed perceptions. There was a major character who was gay, positive, a role model. All of a sudden it was normal to see him kissing his boyfriend onscreen."

Yet the "bubble" metaphor for Tel Aviv's unusual liberality persists. Jonathan Danilowitz was the plaintiff in one of the 1990s' most publicised civil-rights cases, when the Supreme Court forced his employer, the airline El Al, to extend spousal benefits to his partner. Now a consultant on gay tourism and founder of Tehilla, a support organisation, he is vehement. "In England the most important issue is what the weather will be like. Here, gay issues become minor compared to: Will there be war? Are we going to be nuked by Iran? What will the religious Jews in Jerusalem do next to destroy our lives? Gay – who cares? People are too busy staying alive."

Just up the coast in Herzliya, Michal Eden rests her iPhone on the table. At 40, she is a barrister with a Tel Aviv law firm, working with victims of domestic abuse. She came out almost 20 years ago, only to be disowned by her Yemeni father and Iraqi mother. "I really don't know what happened," she says with restrained emotion. "My father became my stalker. I came from a loving family; I never thought it would be that bad. I never thought they would make me choose."

She talks smoothly, unhurriedly. "I wanted to be a maths teacher, but the oppression I experienced made me join the struggle." After volunteering for the Aguda, Eden became Israel's first lesbian to be elected to public office when she was voted on to the Tel Aviv City Council in 1998. After a series of achievements, including establishing a shelter for LGBT teenagers rejected by their parents, Eden quit public life to start a family. She has trenchant views about the "bubble" syndrome.

"Gay Jewish white guys in Tel Aviv don't need an agenda. Tel Aviv gives them the liberty to fuck and settle down. It's those at the margins who suffer most: transgender, Arab gays, the poor. Our legal status is excellent; our problems are cultural and social."

Others also warn against bubble mentality. Uzi Even – a professor of chemistry at Tel Aviv University who was instrumental in the 1990s in overturning sexual discrimination in the army and who was also the first homosexual member of the Knesset, Israel's parliament – is even clearer. "One of the reasons we have not witnessed a bad atmosphere against gays," he observes, "is because we have a visible object to hate: the Palestinians. Jewish Israeli society has benefited by having a common enemy."

Even urges gays to campaign for Palestinian rights, to little effect. Mike Hamel even rejects the notion. "We deliberately do not take a stand on the occupation," he says, "because it is in conflict with our main agenda. The right wing are my target. Gays in the religious communities need me more than anyone else. If I identify with the Palestinians on a non-gay issue, I close my doors to a large segment of the gay population."

Palestinians are notable for their absence in Tel Aviv, and I was told about a new wariness, with Palestinian gays from Jaffa now preferring to party in Haifa, 55 miles away, rather than attempt to penetrate Tel Aviv's bubble.

And for gay Palestinians in the West Bank, trapped in close-knit communities with few civil rights, the situation remains dire. Previously they could flee; now, Israel's barrier has effectively closed their escape route. Tales abound of gay Palestinians being blackmailed into collaborating with the Israeli security services, or even into spying for one Palestinian faction against another, often with fatal consequences.

Nitzan Horowitz, the only gay Knesset member, is blunt. "People in Tel Aviv think the struggle is over – not at all!" he says. "More than 50 per cent of kids in first and second grade are in ultra-orthodox or Arab schools, where LGBT rights are not addressed. In 10 years' time those people will vote. I don't see this liberal paradise."

It's Saturday night in central Tel Aviv. Bars and restaurants are packed. I approach 28 Nachmani Street and head down the dog-leg stairs. Shaul Gannon stands by the basement flat. He now spends Saturday evening as a bouncer for the Bar Noar. "It's horrible," he says. "I hate to see this door closed."

Inside, it's like any youth club. Teenagers of both sexes are playing table football. There is music playing. On my right is the wooden counter behind which Nir Katz was shot dead. There's a crackle of atmosphere as people register my sudden, alien presence, but the mood passes when Gannon claps me on the shoulder.

I spend more than two hours there. At one stage, young people are queuing up to tell me their life story, what happened that night, how important Bar Noar is to them.

It seems impossible to me that the August gunman wasn't familiar with his target. The noise from bars and restaurants 50 metres away on the main Rothschild Boulevard, not to mention the quantities of people out on the streets, laughing and carousing, entirely swamps the tinny music from the basement flat. Nachmani Street is placid, residential, shadowed. How did he know to come here? Why, having already killed Nir Katz, did he point his gun at Chen Langer's face, but shoot him in the leg? With the investigation continuing, Langer can't speculate.

Out on Rothschild, as on every Saturday night, there's a party atmosphere, singles, couples and groups, gay and straight, mixing in pursuit of a good time. Going out is an obsession. It lends a unique vibrancy – but one person described it to me as national escapism. To journalist Lisa Goldman, her home city is starting to feel like Weimar Berlin. "I'm worried," she says. "This exuberance is inarticulate. We've become used to hopelessness."

Uzi Even's observation about a common enemy conceals the possibility that the greatest threat to Jewish Israeli society may lie within. In Chen Langer's words: "We want others to acknowledge Israel as the home of the Jewish people, but we ourselves cannot define what 'Jewish' is."

For many secular Jews – both within and beyond the Tel Aviv bubble – Israel's religious right has corrupted society and continues to hold the country back. For many religious Jews, secure with the occupation, contemporary secularism – exemplified by advances in gay rights – represents the gravest threat to the nation's well-being.

The shooting at the Aguda – apparently a one-off atrocity, possibly committed with inside knowledge – should be a wake-up call. It has exposed fault-lines running right through Jewish-Israeli society. If unbridged, they could pull the country apart.