Israeli officials called it the deadliest attack in Jerusalem in six years.
Israeli Prime Minister Ariel Sharon immediately vowed to fight "Palestinian terror" and summoned his cabinet to decide on a military response to the organization that Sharon had once described as "the deadliest terrorist group that we have ever had to face."
Active in Gaza and the West Bank, Hamas wants to liberate all of Palestine and establish a radical Islamic state in place of Israel. It is has gained notoriety with its assassinations, car bombs and other acts of terrorism.
But Sharon left something out.
Israel and Hamas may currently be locked in deadly combat, but, according to several current and former U.S. intelligence officials, beginning in the late 1970s, Tel Aviv gave direct and indirect financial aid to Hamas over a period of years.
Israel "aided Hamas directly -- the Israelis wanted to use it as a counterbalance to the PLO (Palestinian Liberation Organization)," said Tony Cordesman, Middle East analyst for the Center for Strategic Studies.
Israel's support for Hamas "was a direct attempt to divide and dilute support for a strong, secular PLO by using a competing religious alternative," said a former senior CIA official.
According to documents United Press International obtained from the Israel-based Institute for Counter Terrorism, Hamas evolved from cells of the Muslim Brotherhood, founded in Egypt in 1928. Islamic movements in Israel and Palestine were "weak and dormant" until after the 1967 Six Day War in which Israel scored a stunning victory over its Arab enemies.
After 1967, a great part of the success of the Hamas/Muslim Brotherhood was due to their activities among the refugees of the Gaza Strip. The cornerstone of the Islamic movements success was an impressive social, religious, educational and cultural infrastructure, called Da'wah, that worked to ease the hardship of large numbers of Palestinian refugees, confined to camps, and many who were living on the edge.
"Social influence grew into political influence," first in the Gaza Strip, then on the West Bank, said an administration official who spoke on condition of anonymity.
According to ICT papers, Hamas was legally registered in Israel in 1978 by Sheikh Ahmed Yassin, the movement's spiritual leader, as an Islamic Association by the name Al-Mujamma al Islami, which widened its base of supporters and sympathizers by religious propaganda and social work.
According to U.S. administration officials, funds for the movement came from the oil-producing states and directly and indirectly from Israel. The PLO was secular and leftist and promoted Palestinian nationalism. Hamas wanted to set up a transnational state under the rule of Islam, much like Khomeini's Iran.
What took Israeli leaders by surprise was the way the Islamic movements began to surge after the Iranian revolution, after armed resistance to Israel sprang up in southern Lebanon vis-à-vis the Hezbollah, backed by Iran, these sources said.
"Nothing provides the energy for imitation as much as success," commented one administration expert.
A further factor of Hamas' growth was the fact the PLO moved its base of operations to Beirut in the '80s, leaving the Islamic organization to grow in influence in the Occupied Territories "as the court of last resort," he said.
When the intifada began, Israeli leadership was surprised when Islamic groups began to surge in membership and strength. Hamas immediately grew in numbers and violence. The group had always embraced the doctrine of armed struggle, but the doctrine had not been practiced and Islamic groups had not been subjected to suppression the way groups like Fatah had been, according to U.S. government officials.
But with the triumph of the Khomeini revolution in Iran, with the birth of Iranian-backed Hezbollah terrorism in Lebanon, Hamas began to gain in strength in Gaza and then in the West Bank, relying on terror to resist the Israeli occupation.
Israel was certainly funding the group at that time. One U.S. intelligence source who asked not to be named said that not only was Hamas being funded as a "counterweight" to the PLO, Israeli aid had another purpose: "To help identify and channel towards Israeli agents Hamas members who were dangerous terrorists."
In addition, by infiltrating Hamas, Israeli informers could only listen to debates on policy and identify Hamas members who "were dangerous hard-liners," the official said.
In the end, as Hamas set up a very comprehensive counterintelligence system, many collaborators with Israel were weeded out and shot. Violent acts of terrorism became the central tenet, and Hamas, unlike the PLO, was unwilling to compromise in any way with Israel, refusing to acquiesce in its very existence.
But even then, some in Israel saw some benefits to be had in trying to continue to give Hamas support: "The thinking on the part of some of the right-wing Israeli establishment was that Hamas and the others, if they gained control, would refuse to have any part of the peace process and would torpedo any agreements put in place," said a U.S. government official who asked not to be named.
"Israel would still be the only democracy in the region for the United States to deal with," he said.
All of which disgusts some former U.S. intelligence officials.
"The thing wrong with so many Israeli operations is that they try to be too sexy," said former CIA official Vincent Cannestraro.
According to former State Department counter-terrorism official Larry Johnson, "the Israelis are their own worst enemies when it comes to fighting terrorism."
"The Israelis are like a guy who sets fire to his hair and then tries to put it out by hitting it with a hammer."
"They do more to incite and sustain terrorism than curb it," he said.
Aid to Hamas may have looked clever, "but it was hardly designed to help smooth the waters," he said. "An operation like that gives weight to President George Bush's remark about there being a crisis in education."
Cordesman said that a similar attempt by Egyptian intelligence to fund Egypt's fundamentalists had also come to grief because of "misreading of the complexities."
An Israeli defense official was asked if Israel had given aid to Hamas said, "I am not able to answer that question. I was in Lebanon commanding a unit at the time, besides it is not my field of interest."
Asked to confirm a report by U.S. officials that Brig. Gen. Yithaq Segev, the military governor of Gaza, had told U.S. officials he had helped fund "Islamic movements as a counterweight to the PLO and communists," the official said he could confirm only that he believed Segev had served back in 1986.
The Israeli Embassy press office referred UPI to its Web site when asked to comment.