Threatened by a potentially nuclear-armed Tehran, Israel is preparing for a possible war with both Iran and Syria, according to Israeli political and military sources.

The conflict with Hezbollah has led to a strategic rethink in Israel. A key conclusion is that too much attention has been paid to Palestinian militants in Gaza and the West Bank instead of the two biggest state sponsors of terrorism in the region, who pose a far greater danger to Israel's existence, defence insiders say.

"The challenge from Iran and Syria is now top of the Israeli defence agenda, higher than the Palestinian one," said an Israeli defence source. Shortly before the war in Lebanon Major-General Eliezer Shkedi, the commander of the air force, was placed in charge of the "Iranian front", a new position in the Israeli Defence Forces. His job will be to command any future strikes on Iran and Syria.

The Israeli defence establishment believes that Iran's pursuit of a nuclear programme means war is likely to become unavoidable.

"In the past we prepared for a possible military strike against Iran's nuclear facilities," said one insider, "but Iran's growing confidence after the war in Lebanon means we have to prepare for a full-scale war, in which Syria will be an important player."

A new infantry brigade has been formed named Kfir (lion cub), which will be the largest in the Israeli army. "It is a partial solution for the challenge of the Syrian commando brigades, which are considered better than Hezbollah's," a military source said.

There has been grave concern in Israel over a military pact signed in Tehran on June 15 between Iran and Syria, which the Iranian defence minister described as a "mutual front against Israeli threats". Israel has not had to fight against more than one army since 1973.

During the war in Lebanon, Ali Akbar Mohtashamipour, the Iranian founder of Hezbollah, warned: "If the Americans attack Iran, Iran will attack Tel Aviv with missiles."

According to the International Institute for Strategic Studies in London, both Iran and Syria have ballistic missiles that can cover most of Israel, including Tel Aviv. An emergency budget has now been assigned to building modern shelters.

"The ineptness of the Israeli Defence Forces against Hezbollah has raised the Iranians' confidence," said a leading defence analyst.

In Washington, the military hawks believe that an airstrike against Iranian nuclear bunkers remains a more straightforward, if risky, operation than chasing Hezbollah fighters and their mobile rocket launchers in Lebanon.

"Fixed targets are hopelessly vulnerable to precision bombing, and with stealth bombers even a robust air defence system doesn't make much difference," said Richard Perle, a leading neoconservative.

The option of an eventual attack remains on the table after President George Bush warned on Friday that Iran must not be allowed to develop nuclear weapons.

While the American State Department favours engaging with President Bashar Assad of Syria in the hope of detaching him from the Iranian alliance, hawks believe Israel missed a golden opportunity to strike at Syria during the Hezbollah conflict.

"If they had acted against Syria during this last kerfuffle, the war might have ended more quickly and better," Perle added. "Syrian military installations are sitting ducks and the Syrian air force could have been destroyed on the ground in a couple of days." Assad set off alarm bells in Israel when he said during the war in Lebanon: "If we do not obtain the occupied Golan Heights by peaceful means, the resistance option is there."

During the 1973 Arab-Israeli war, the Syrian army briefly captured the Israeli strategic post on top of Mount Hermon on the Golan Heights.

Some Israeli analysts believe Syria will try again to take this post, which overlooks the Syrian capital, Damascus.

As a result of the change in the defence priorities, the budget for the Israeli forces in the West Bank and Gaza is to be reduced.

The Israelis are integrating three elite brigades that performed well during the Lebanon war under one headquarters, so they can work together on deep cross-border operations in Iran and Syria.

Advocates of political engagement believe a war with Syria could unleash Islamic fundamentalist terror in what has hitherto been a stable dictatorship. Some voices in the Pentagon are not impressed by that argument.

"If Syria spirals into chaos, at least they'll be taking on each other rather than heading for Jerusalem," said one insider.

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