With Hamas significantly reinforcing its rocket capabilities in the Gaza Strip, an Israeli delay in dealing with the situation will only enhance Hamas's ability to carry out terrorist attacks and add to the casualties when Israel is eventually forced to act, Yuval Diskin, the head of the Shin Bet (Israel Security Agency), told the cabinet on Sunday. Diskin said Israel faced two scenarios in Gaza: an escalation of the violence, or a period of calm with "low chances of stability." Despite this pessimistic forecast, Amos Gilad, head of the Defense Ministry's Security-Diplomatic Bureau, flew to Egypt on Sunday for meetings with Intelligence chief Omar Suleiman in an attempt to promote a cease-fire. Prime Minister Ehud Olmert told the cabinet Israel would soon have to make a critical decision regarding Gaza. However, he said, a decision to "go forward" with a major military operation needed to be weighed carefully, and taken only after there was no choice, since it could lead to "additional costs" that would outweigh its benefits. The cost he was referring to, according to government officials, was the end of the current negotiations with the Palestinian Authority. The ministers heard a pessimistic briefing from Diskin, who said Hamas already had rockets able to reach areas beyond Ashkelon, perhaps as far as Ashdod and Kiryat Gat. If the smuggling into Gaza did not stop, he said, "it will only be a matter of time" before these missiles hit. Hamas was tightening its ties with Teheran, and some of the rockets being used by the Islamist group were of Iranian make, Diskin said. "The scale of the threat against Israel is growing," he said. Hamas had managed to smuggle high-quality weaponry into the Strip following the breach of the Rafah border with Egypt in January. "Hamas already has considerable abilities and possesses hundreds of rockets with a range of 20 kilometers. If the issue is not addressed, Hamas will have additional cities within its range," he said. Diskin was not optimistic at the prospect of a cease-fire with Hamas, saying "the chances for calm are very low" due to the gaps between the sides. According to Diskin, Hamas is skeptical of the current cease-fire talks bearing any fruit, but has still not closed the door to contacts with the Egyptians on the matter. The Egyptians, he said, were still earnestly working to reach an agreement, because it served their national interest, since they were worried that chaos in the Gaza Strip could lead to a mass exodus to Egypt. According to Diskin, Hamas wants a truce, and is especially keen on seeing the siege lifted - especially, but not solely, by opening the Rafah crossing into Gaza. They also want a commitment from the Egyptians that if the cease-fire talks fail, they will open the Rafah crossing nonetheless. In addition, Diskin said, Hamas wanted a date for when a cease-fire would be extended to the West Bank, and was saying it could not force the other armed organizations in Gaza to go along with the cease-fire, and that each organization would have to deal with the Egyptians individually. Israel rejects both those points. Diskin said that while the reduction of fuel shipments to the Strip had been effective in reducing Gazans' support for Hamas, there was concern that if this continued Hamas would step up terrorist attacks in an attempt to break the siege. Vice Premier Haim Ramon reiterated to the cabinet his objections to any indirect talks with Hamas to bring about a cease-fire, saying they would only give European countries an opening to talk to the organization. Hamas, he said, had to be removed from power in Gaza. Officials said Gilad would return to Egypt next week to continue discussions on a cease-fire. In the meantime, Suleiman would meet with Hamas in an attempt to regain its leaders' support for a truce, they said. A cease-fire was still far from being finalized, Israeli officials said, and it would take several more weeks of talks and coordination before a truce was implemented in Gaza. The officials reiterated the threat that if the truce talks failed, the chances of a large IDF operation would increase. Last week, Defense Minister Ehud Barak proposed a two-stage deal - first a cessation of military operations and terrorism, and then a lifting of the siege of Gaza in exchange for "progress in negotiations" for the release of kidnapped soldier Gilad Schalit. Israel also demanded in its proposal a strong Egyptian commitment to curb the weapons smuggling from Sinai under the Philadelphi Corridor and into the Gaza Strip. Over the weekend, Hamas expressed discontent with the proposal and announced that the Egyptian-mediated talks had failed. Israeli officials said Hamas opposed connecting Schalit's release to a cease-fire since it preferred a separate deal in which it would boost its popularity by freeing more Palestinian security detainees being held in Israeli prisons.