After a lull seven years long, terrorist bombings returned to the streets of Jerusalem on Wednesday, serving as a stark reminder of a period that many residents of the capital had preferred to forget.

The attack which rocked the entrance to the capital on Wednesday morning came just hours after two Grad-model Katyusha rockets fired from the Gaza Strip landed in Beersheba and another hit south of Ashkelon.

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While Police Insp.-Gen. Dudi Cohen tried to downplay the connection between the two attacks, the IDF believes that both are likely connected and that it is possible that the attack in Jerusalem was carried out by Hamas or Islamic Jihad as a possible way to move the fighting from Gaza to other parts of Israel.

Islamic Jihad had vowed to retaliate against an air strike on Tuesday which killed four of its senior operatives.

The investigation will likely lead the Shin Bet (Israel Security Agency) to the West Bank, where Hamas is still known to have some infrastructure, even though it is under constant threat from the IDF as well as the security forces of the Palestinian Authority.

The investigation, like many before it, is currently on two different tracks – operational and intelligence.

Immediately after the attack, the police shut down much of the city for the simple reason that, unlike in a suicide bombing, there was a live attacker on the loose who was also likely the one who detonated the bomb either with a timer or a mobile phone.

The second track, intelligence, falls under the responsibility of the Shin Bet, which judging by past experience is usually successful in apprehending those responsible for such attacks.

The Jerusalem attack will force Prime Minister Binyamin Netanyahu and Defense Minister Ehud Barak to make some tough decisions.

On the one hand, their immediate instinct will be to respond harshly to the attack in an effort to deter future ones in Jerusalem or other parts of Israel. On the other hand, an aggressive Israeli response could turn the current rise in violence, which may still die down, into a cycle that will culminate in another massive incursion into the Gaza Strip, like Operation Cast Lead two years ago.

Depending on what Netanyahu wants to do with the Palestinian peace track, he could use the current escalation in terrorist attacks to his advantage. If he doesn’t want to renew the talks and instead maintain the status quo, then the attacks in Itamar, Beersheba, Ashkelon, Ashdod and now Jerusalem are the perfect excuse.

On the other hand, if he wants to move forward with the peace talks with the PA leadership in the West Bank then he can use the recent spate of attacks as proof of Israel’s need for security assurances before any future concessions, a topic that will be discussed on Thursday in talks Barak will hold with visiting US Defense Secretary Robert Gates.

It will also reinforce Israel’s claim that the IDF needs to retain a presence in the Jordan Valley even if it withdraws from most of the West Bank.

According to defense officials it would be almost impossible today for the Palestinians to launch a third intifada on the same scale as the wave of terror that erupted in the territories in 2000.

The IDF has done an effective job in combating terror in the West Bank, turning 2010 into the quietest year in the past decade. The PA security forces are also doing an effective job in cracking down on Hamas, an official said.

In addition, the fact that the PA is arranged in real, conventional-looking security forces would also work against them in a future conflict with the IDF, which would have an easier time fighting against an organized military force than lone terrorists like it did in the early 2000s.

This does not mean that terrorist attacks are not possible.

Jerusalem has not known an explosion like the one that occurred on Wednesday since 2004 and has not seen a terror attack since the bulldozer rampages in 2008.

The greatest challenge for the government and the IDF will be to find a way to restore Israel’s deterrence, particularly in the Gaza Strip, while containing the violence from growing into a larger-scale conflict.

This may prove too difficult a balance, meaning that Wednesday might just be the kickoff for Operation Cast Lead No. 2.

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