ISRAEL seems content to keep Iran and the rest of the world guessing uneasily about whether and when it might attack the Islamic Republic's nuclear facilities. It has done little to douse speculation stoked by a big Israeli air force exercise last month, an Israeli cabinet minister's remark that military action was “inevitable” and a prediction by former US official John Bolton that this might occur in the final weeks of President George W. Bush's term. Iran derides the chatter as “psychological warfare” and threatens dire retaliation if any assault materialized. Gulf Arab states whose oil exports could be among Iranian reprisal targets shuffle nervously, as crude prices push higher. “Should Israel be stupid enough to attempt an attack on Iran, as has been repeatedly threatened, then of course Tehran has the perfect right to retaliate in kind,” wrote the Dubai-based Gulf News daily in its editorial on Monday. “But it does not quell the existing nervousness of people in the region by Iran stating that as part of its retaliation it would block ... Gulf oil routes,” the newspaper added. The Israelis may believe that mere talk of military action can spur Iran to alter its behavior, or at least prompt tougher international action to induce Tehran to curb its nuclear quest - which the Iranians say is only to produce energy, not bombs. Ephraim Kam, deputy director of the Jaffee Center for Strategic Studies at Tel Aviv University, said Israel preferred for now to let diplomatic pressure run its course. “The talk (of military options) is designed to project deterrence, pressuring the Europeans to increase their pressure in hope this will curb Iran,” he told Reuters in Jerusalem. Israeli fears Yet the Israeli military is presumably honing contingency plans, given Israel's deeply rooted fears that a nuclear-armed Iran would threaten its existence - even though the Jewish state has its own powerful, if undeclared, nuclear deterrent. “The IDF (Israel Defense Forces) should be ready for all options,” former army chief of staff Moshe Yaalon told reporters last week. “A military strike in Iran is not an easy ride. It should be a last resort, but we shouldn't exclude it.” He described Bolton's idea that an Israeli attack could take place between the US election in November and the presidential inauguration in January as “very interesting speculation.” Bolton, who advocates using force against Iran, sees little chance that the Bush administration will do so, especially after a US intelligence report last year said Tehran had halted work on a nuclear bomb, while forging on with other atomic activity. Leaked reports of a major Israeli military exercise over the Mediterranean on June 2 amplified debate over Israel's posture. US officials, who asked not to be named, said the drill involved 100 aircraft, but would not confirm or deny a New York Times report that it was a dry run for bombing Iran. Some defense analysts argue that even a full-scale US air campaign would only delay Iran's nuclear plans by a few years - Israeli forces operating far from home could not hope to destroy all of its many dispersed and fortified atomic installations. Mohamed ElBaradei, head of the U.N. nuclear watchdog, the International Atomic Energy Agency, warned last month an attack on Iran would turn the Middle East into a “fireball” and prompt Tehran to try to build nuclear bombs as fast as possible. But Israel might decide to go ahead anyway after weighing all the risks of retaliation, regional instability and damage to the world economy against what it sees as an existential threat. Fateful decision “Anyone who knows the Israelis knows they are not going to sit back and hope for the best. They take big risks for their security,” said a senior European diplomat in the region. “They will be very resolute. They won't be afraid to drag others in.” That moment has not yet come. When Israeli Deputy Prime Minister Shaul Mofaz said last month that strikes on Iran looked unavoidable in view of that country's nuclear progress, critics at home accused him of exploiting strategic security issues for political gain. The Jaffee Centre's Kam said Israel could expect criticism for any assault on Iran, even from its allies in the West. “But I think in the end there would be understanding abroad, perhaps even a sense in the West that the Israelis did its dirty work. Iran doesn't have that many friends out there,” he added. The United States has repeatedly shielded its Israeli ally from censure by the U.N. Security Council for military action against its Palestinian and other Arab foes. A strike on Iran, however dire the consequences, might be no different. “It is very difficult to see the US chastising Israel,” said Trita Parsi, a Washington-based expert on relations between the two countries and Iran. “The US may adopt a quiet attitude, while celebrating the attack behind the scenes.” Bruce Riedel, a former CIA officer now at the Brookings Institution, said senior Israeli military planners believed a mission to dent Iran's nuclear program was feasible. “History shows Israel will use force to maintain its monopoly of nuclear weapons in the Middle East,” he told Reuters by email, citing past Israeli attacks on Iraq and Syria. “Israeli political leaders may see the last months of a friendly Bush administration as a window of opportunity.” Noting that US forces in the Gulf and Iraq were likely targets for Iranian retaliation, which could also spark another war in Lebanon and send oil prices soaring, Riedel said: “Washington has vital strategic interests at stake here and needs to enunciate clearly its view on the wisdom or dangers of an Israeli operation.” – Reuters (Additional reporting by Dan Williams and Alastair Macdonald in Jerusalem, Edmund Blair in Tehran and Lin Noueihed in Dubai.) __