JERUSALEM — Israel's prime minister on Thursday warned that Egypt's Sinai desert is becoming a "terror zone" and vowed to strike at militants there after a rocket fired from the area hit a southern Israeli resort town.
The tough talk, however, was tempered by Israel's desire not to disturb the already fraught relationship with Egypt. Israeli officials acknowledged their options are limited as the new government in Egypt – one of Israel's few allies in the Arab world – tries to secure its sovereignty over the mountainous Sinai Peninsula.
Thursdays' rocket attack, the first on Eilat in nearly two years, raised new Israeli concerns about militant activity in Sinai, particularly since the fall of Hosni Mubarak's regime last year. Israeli security officials have repeatedly warned of a power vacuum in Egypt and say that Islamic militants, including al-Qaida, have stepped up their activity in Sinai and are now active on Israel's doorstep.
"We are seeing now with Eilat that the Sinai Peninsula is turning into a terror zone," Prime Minister Benjamin Netanyahu said. "We will strike at those who attack us. There can be no immunity for terrorism; it must be fought and we are doing so."
Israeli Defense Minister Ehud Barak threatened to "strike those responsible for firing (the Grad rocket) at Eilat."
No injuries were reported in the overnight strike against Eilat, a normally tranquil Red Sea vacation spot that is set to welcome thousands of visitors this weekend for the Passover holiday.
There was no immediate claim of responsibility, and Egypt denied the attack was launched from its territory. "The chief of security of southern Sinai has already denied that the rocket was fired from the Sinai territory," Egyptian Foreign Minister Mohammed Amr told reporters in Cairo.
But Israel military officials, citing intelligence, said all signs were that the rocket had been fired from Egypt. It would be the third such time since 2010 that militants in Egypt have fired rockets toward Israel.
Israel has warned of growing lawlessness in Sinai following the uprising last year that overthrew Mubarak's regime.
Sensing the growing threat, Israel has increased its surveillance on the Egyptian border and is building an electronic barrier along the 230 kilometer (150 mile) frontier in a bid to keep out militants and illegal migrants. It is expected to be completed by the end of the year.
But the fence cannot protect southern Israel from rockets, a gap that Netanyahu pointed out on Thursday.
Palestinian militants in the Gaza Strip, separated by a border fence from Israel, have fired thousands of rockets into Israel in recent years. Israel has responded to Gaza rocket fire with military reprisals and the deployment of a rocket-interception system known as Iron Dome.
Rocket fire from Egypt is far rarer, and it is not clear if Israel plans to move the anti-rocket system, which is still in its infancy and expensive to deploy, to the border with Egypt.
Thursday's attack left Israel in a delicate position: absorbing hostile fire from a neighboring country but having few options to respond.
Eli Shaked, a former Israeli ambassador to Egypt, said Israel's hands are tied until a government takes shape in Cairo that is ready and able to tackle the militancy in the Sinai Peninsula. Israel's historic peace agreement with Egypt is a cornerstone of Israeli security policy, and Israel cannot do anything that might sabotage the peace.
"Israel has no choice but to wait," he said.
An Israeli official echoed those limitations.
"We will fight terror, of course, but we don't intend to enter Egyptian territory. That's not an option," said the official, who spoke on condition of anonymity because he was not authorized to discuss the sensitive diplomatic issue with the press. "We can talk to (the Egyptians), but that's it."
Both Shaked and the official were confident Egypt would work to rein in anarchy in Sinai, but that it would take time before it could do so. Egypt votes for a new president in May.
No injuries were reported in Thursday's incident. But it was part of a string of attacks believed to have been launched from Sinai over the past year years.
Last August, gunmen from Sinai sneaked into Israel and ambushed vehicles on a desert highway, killing eight Israelis. Three Egyptian soldiers were killed in Israel's subsequent hunt for the militants, causing a diplomatic crisis that ended with an Israeli apology. It is unclear if Israeli soldiers crossed the border in their chase.
That incident suggested that Gaza militants with their allies in neighboring Sinai were exploiting Egypt's political turmoil to open a new front against Israel.
It also highlighted the delicate balance Israel must maintain between trying to defend its border and protect its relationship with Egypt.
Rockets last hit Eilat and the nearby Jordanian town of Aqaba in August 2010, killing one person and wounding four. In April of that year, two rockets landed in Aqaba and the remains of one were found in the waters off Eilat.
Egypt became the first Arab nation to sign a peace treaty with Israel in 1979. After Mubarak's fall and with the rise of Islamist parties who traditionally view Israel with hostility, Israel has become concerned that the accord may be under threat.
The Muslim Brotherhood, the largest party in Egypt's parliament, does not openly oppose the peace deal, but has said it would consider amending the pact to allow more Egyptian troops along the border with Israel. The deployment of Egyptian forces in Sinai is limited under the 1979 deal.
Israel's insistence that the peninsula be significantly demilitarized was a key aspect of the 1979 peace deal.
Today, however, this provision makes it difficult for Israel itself to demand the Egyptians do a better job of policing the vast desert triangle that separates Asia from Africa. In the aftermath of Mubarak's ouster, Israel permitted Egypt to send in more troops than the 750 allowed under the treaty.
___
Follow Tia Goldenberg at http://twitter.com/tgoldenberg
Carlo Strenger: Settlement Boycott Will Not Save Two State Solution: An Open Letter to Peter Beinart
Rabbi Laura Baum: What Can Elijah Learn From Santa Claus?
Loading comments… 
By TIA GOLDENBERG 04/ 5/12 12:08 PM ET