Israel Reels From Blows at Home, Abroad : Reaction: A ‘new wave of terror’ is seen. The mood appears to favor Shamir’s right-wing views.

Israel’s latent but ever-present feelings that it is under siege broke quickly into the open Wednesday, one day after a bomb devastated its embassy in Argentina, a wild stabbing spree in Tel Aviv left two dead and diplomatic woes deepened with its closest ally, the United States.

It is often said that such a mood favors the uncompromising right-wing views of Prime Minister Yitzhak Shamir, who is running for reelection. This year, the equation is jumbled by the candidacy of the Labor Party’s Yitzhak Rabin, who is also considered a hard-liner on security, although he preaches accommodation with Palestinians.

Tuesday’s car-bomb blast at the Israeli Embassy in Buenos Aires provoked an especially vivid sense of deja vu . The bombing killed at least 10 Israelis.

“One way or the other,” wrote a commentator in the liberal Al Hamishmar newspaper, “the important fact is that in recent weeks we are witness to a new wave of terror, in a fashion like the 1970s, aimed against Israeli and Jewish interests throughout the world.”

In Beirut, the Iranian-backed underground group Islamic Jihad (Islamic Holy War) claimed responsibility for the blast. Islamic Jihad said the bombing was meant to avenge the assassination of Sheik Abbas Moussawi, a Lebanese underground leader the Israelis targeted and killed Feb. 16 in a rocket and helicopter attack.

Earlier this month, a security official at the Israeli Embassy in Turkey was killed when a bomb attached to his car exploded. Islamic fundamentalists claimed responsibility, calling it vengeance for Moussawi.

As it did after the Turkish bombing, Israel struck a defiant note. “Israel will know how to find the way to punish those responsible for such barbaric acts,” Foreign Minister David Levy warned.

The words were viewed by Israeli observers as foreshadowing retaliation in Lebanon and perhaps other parts of the world. In the 1970s, when Palestinian terrorists were targeting Israeli diplomats and citizens abroad, agents of Mossad, the country’s secret service, fanned out in Europe to avenge the deaths.

However, such tactics do not seem to deter actions such as Tuesday’s rampage in Tel Aviv, in which a Palestinian from Gaza slashed a group of teen-agers on the street, killing two.

Wednesday, a soldier fatally shot a Palestinian woman in the Gaza Strip after she allegedly stabbed and wounded an Israeli woman.

Shamir suggested that the solution to the violence lies in further crackdowns on Palestinians.

“Without a doubt, the government will have to find a way to halt inhuman crime (from) running wild,” he said.

The convergence of blows at home and abroad comes as Israel begins a debate on how best to deal not only with its close neighbors, but also with the wider world that is no longer divided into Cold War camps. Shamir opposes surrendering territory won in the 1967 Middle East War.

Rabin is trying to persuade voters that military force ought to be grafted onto a willingness to give up at least some land--and the restive Palestinian population living in the West Bank and Gaza. He also has opposed surrender of the Golan Heights, which Syria wants to recover.

Relations with the United States play deeply into the debate. President Bush rejected U.S. guarantees for cut-rate loans to Israel on the grounds that the funds would free Shamir to press ahead with the expansion of settlements in the West Bank and Gaza.

In Washington, State Department spokeswoman Margaret Tutwiler said the bombing in Buenos Aires and Tuesday’s stabbing deaths “are tragic reminders of the dangers that the Israeli people face and the constant threats against Israel’s very right to exist. We will stand with Israel in doing all we can to counter these outrageous threats.”

Shamir shrugged off Bush’s toughened stance on the loan guarantees and predicted that he would come around to Israel’s view. “I see this as being a passing episode. If we don’t change our way--and continue on our political path--I have no doubt that the stance of the (United States) will change in the course of time,” he said.

Independent observers were more alarmed.

“The state of relations with the United States is a grave problem and the damage being caused Israel is far-reaching and concerns our existence,” wrote a commentator in the influential newspaper Haaretz. “In a changing world in which a new order is supposedly taking place, Israel is losing its traditional place on the American map.”

There was far from any agreement about what conclusions Israelis might draw from Tuesday’s range of events and whether they would make the arguments of Shamir or Rabin more compelling.

Israelis may well draw the wagons in a circle against Bush’s pressure, suggested Harry Wall, the Jerusalem director of the Anti-Defamation League. “On a day in which two terror attacks took place, it might be hard for Bush to persuade Israelis that settlements are the big problem,” he said.

Others speculated that Israelis might be weary of the defiant rhetoric of Shamir and the Likud Party, which in 15 years of political dominance has yet to provide for safety.