Three weeks into the war, the prospect of retaliation against Iraq for its Scud attacks remains an Israeli fantasy–and an American nightmare. Israel’s leadership has heeded the Bush administration’s requests to sit out the fight and avoid damaging the fragile U.S.-led coalition. But as the conflict heats up and the threat of a chemical-weapons attack by Saddam continues sentiment is building among Israeli hawks and even some moderates for a strike. Military strategists have discussed several possible operations, both on the ground and in the air. Some analysts say that Israeli military intelligence, commando experience and willingness to take risks could give Israel an edge the allies don’t have. Meanwhile, Prime Minister Yitzhak Shamir has urged Washington not to prevent Israeli air raids by withholding identification codes for American fighter jets over Iraq. (Without such codes, Israeli pilots risk being mistaken for the enemy.) “Saddam Hussein’s capability has decreased since the beginning of the war,” says Israeli Defense Minister Moshe Arens. “However, for Israel, this is not enough.”

The possibility of reprisal has become a highly sensitive subject in Israel. Military officials will not discuss the matter publicly. Israeli censors refuse to allow the publication of hypothetical scenarios or even issues raised in the Israeli press as recently as last week. From sources in Israel and Washington, however, NEWSWEEK has pieced together some possible options:

Allied bombers have devoted a third of their missions to knocking out Scud launchers, and it’s doubtful that Israeli pilots could stage a more massive operation. But one well-placed U.S. defense analyst with knowledge of the Israeli military says Israel would not send jets out on conventional bombing raids. This source suggests that Israel might airlift commando teams into Iraq along with portable land vehicles to hunt Scuds. These “target designators” would use laser beacons to “paint” the Scuds for attacking–and bombers would drop in for the kill. The U.S. source says that the Israelis would likely have a much more effective system for knocking out the Scuds than the allies have used. Allied pilots frequently arrive at designated targets only to find that Scud launchers have been moved. “If the Israelis had gone after the Scuds, they would have generated more actual attack sorties in a day than the allies could generate in 14 days,” says this analyst.

The Israelis might conduct a risky, Entebbe-style raid on Baghdad. Highly trained commandos from the elite Sayeret Matkal unit could slip into the capital by night to strike human targets. “Moles” working for the Mossad and Iraqiborn Israelis may have blended into Baghdad society to plan a hit on Iraqi officials. An assassination attempt on Saddam Hussein hasn’t been completely ruled out, although success seems unlikely. The allies suspect Saddam moves constantly between bunkers and is accompanied around the clock by as many as 700 guards. Says Joseph Alpher, a former Mossad official and current deputy head of the Jaffee Center for Strategic Studies in Tel Aviv: “Saddam Hussein is the most hunted man in the world, and he’s taking good care of himself.”

There has been speculation in the United States about whether Israel might use its purported nuclear arsenal, said to number about 100 weapons. But according to a top U.S. defense analyst, Israel would turn to its secret arsenal “only if the Iraqis were able to kill lots of people.”

The political fallout from any attack on Iraq could outweigh the advantages. Israel’s restraint has won the country worldwide sympathy and chits that could give it leverage in postwar negotiations over the Palestinian issue. Last week Germany delivered $670 million in aid, including gas masks and poison-gas antidotes. An assault would undermine that good will and threaten the anti-Saddam coalition. A military failure would be catastrophic, damaging Israeli morale and elevating Saddam’s reputation in the Arab world. Even the removal of all Scud launchers in western Iraq could backfire: Iraq might employ longer-range weapons it may have in reserve, including the al-Abbas, another Iraqi-improved Scud under development that has a range of up to 480 miles.

If further Scud attacks hurt or kill Israelis, however, Israeli military leaders may feel that sitting on the sidelines is intolerable. A raid on Iraq, even in the war’s closing days, could help the military brass regain the luster they lost by miscalculating Saddam’s strength; before Jan. 16, military intelligence assured reporters that Iraq could fire just “one or two missiles” before the rest were obliterated. A raid would also relieve the Army of its frustrating sense of inaction. Restraint “is not part of Israel’s security doctrine,” says Reuven Pedhatzur, military correspondent for the daily newspaper Haaretz. Even so, given the precarious alliances of the Persian Gulf War, Israel may ultimately decide that the best response is no response at all.