The bohemian corner of Israel that refuses to run from the bombers

Avi Levy was in his fast-food shop, putting salad in a hot dog, when the policeman walked in after politely announcing through the loudspeaker of his patrol car: "Good afternoon, residents. You have been asked to stay in your houses and go in the security rooms." Mr Levy, 48, was unimpressed. Insisting his larder was sufficient refuge should one of the 20-plus Katyusha rockets which fell on this historic city yesterday come his way, he said of the Hizbollah leader Hassan Nasrallah: "If we all hide, he will think he's won." That may be, the policeman retorted, "but you'll pay a price if he gets you". A woman and her grandson were reportedly killed by a rocket attack in a moshav (smallholders' co-operative) outside the city last night.

Mr Levy, who, with his shoulder-length hair, combines the appearance of an ageing 1970s rock star with some distinctly right-wing views, declared: "We shouldn't give a reward to terrorism." Insisting that Israel should never have left Lebanon six years ago, he added: "We are normal people. We eat, drink, sleep, screw, listen to Pink Floyd; why should we end our lives because a few ayatollahs say so?"

Mr Levy's secular agenda has more in common with the bohemian artists' colony in the lanes and alleys of Safed's old city than the high proportion of deeply religious residents which equally help to make it one of the most distinctive in all Israel. Although Jews have lived in the city since ancient times, it was a predominantly Arab-populated city until 1948, when almost all of its 10,000 Arab residents fled, including the family of its most famous Palestinian son, President Mahmoud Abbas.

Most residents proclaimed themselves determined to stay despite the rocket volleys coming from over the border. Abraham Farej, 56, the father of 22-year-old Ariel, who was injured by a Katyusha yesterday as he slept at home, said his family, originally Jews from Syria, had been in the city for 11 generations and proclaimed: "It doesn't matter if there are 50,000 Katyushas. People here are tough."

A Katyusha exploded a few hundred metres away from the hospital where the city's former mayor, the lawyer Yossi Oz, was explaining how he was injured in his arms and back as he dictated a letter to his secretary the previous day. The wreckage of the partly destroyed second floor of the building opposite, in the heart of the city's commercial district and directly hit by a Katyusha, was still visible.

Mr Oz, 55, said that until this week, Katyushas had not fallen on Safed since the early Seventies and residents had become used to thinking of themselves as out of range. "Even the shelters doubled up as children's play centres," he said. Now he was worried at the threat to the tourists and religious visitors on which Safed greatly depends. Founded, according to Jewish legend, by a son of Noah, the city had been known in the 16th century as the birthplace of Kabbala mysticism. The city last week hosted the Kleizmer music festival attended by 100,000 people. "If a Katyusha had landed in the street where the festival was being held it would have killed many people and injured more," he said.

Mr Oz is convinced that Hizbollah deliberately mounted the raid in which two Israeli soldiers were abducted to "warm the [northern] border" and relieve the pressure on Hamas in Gaza over its own seizure of the army corporal Gilad Shalit. Noting that troops pulled out of central Gaza yesterday, he added: "And it worked."

But for Nachman Cohen, 20, a Hasidic Jew, the explanation of what was happening was very different. Mr Cohen said that much of ultra-orthodox Safed was embroiled in a religious dispute between the followers ­ like himself ­ of the sage Rabbi Nachman of Breslau and a rival group claiming to follow the Rabbi "but in a counterfeit way". Saying that the Katyushas were a rebuke to the heretical side of this argument, Mr Cohen even suggested that that was why Mitzu Ruzbaum, the 33-year-old ultra-orthodox Jew killed on Wednesday by a Katyusha as he rode his bicycle, had died. Using the city's Hebrew name, he added: "Most of the people in Zefat are religious and religious people believe everything in the world has a religious explanation. We are not afraid because we believe if you go the way of the holy people, you are not going to be hit by a Katyusha."