Palestinian protesters clash with Israeli soldiers in Hebron on July 6.
Abed Al Hashlamoun—EPA
By Karl Vick
July 10, 2014

It only looks familiar: The orange fireballs blooming over the Mediterranean cityscape, the rush to bomb shelters emptying city streets on the Israeli side, while on the other, crowds mill around the remains of whatever sedan was carrying the Palestinian militant before a missile roared home.

The Gaza Strip generates conflict as reliably as a low-pressure system generates rain, and the horrors that have been unfolding in the overcrowded home to 1.8 million people are sadly far from new. The instinct of outsiders–including, it sometimes seems, officials in Washington–is to look away. But this time the stakes may be much higher.

That’s because the battle now is not only between Israel, which patrols Gaza on three sides, and Hamas, the Islamist Palestinian faction pledged to the country’s destruction. Both sides are aware that the continued fighting fuels chaos far beyond what has been seen so far during Operation Protective Edge, as the Israelis dubbed the campaign that began on July 8. Israel wants to hit Hamas, but not so hard that the organization is knocked out of power and a more radical group steps into its place.

In Gaza, the sobering fact is that the alternatives waiting in the wings range from the vicious Islamic Jihad, a favorite of Iran, to an array of fundamentalist militants that now include the Islamic State of Iraq and Greater Syria (ISIS), the post-al-Qaeda band that declared a new Islamic caliphate on land conquered just a few hundred miles to the east. “We don’t want Gaza to become like Iraq or Syria,” an Israeli security official tells TIME. Hamas, for all its insistence on armed resistance, has civilian and diplomatic interests that can be leveraged. ISIS does not.

On Israel’s side, the violent potential of its extremists became all too apparent in the week leading up to the latest offensive. For much of June, Israeli Prime Minister Benjamin Netanyahu had been mulling a strike on Gaza in retaliation for the murders of three kidnapped Jewish Israeli teens allegedly taken by suspects with ties to Hamas.

The militant group was already the weakest it had been since coming to power in the coastal enclave in 2007. It has been largely abandoned by Iran and isolated both politically and physically by the demise of the Muslim Brotherhood government in Egypt, which borders Gaza to the west. Newly installed Egyptian President Abdel Fattah al-Sisi had declared war on all Islamists, virtually shutting down the tunnels Hamas has used to restock its missile arsenal since the last Israeli offensive, in November 2012. So an air offensive targeting Hamas’ remaining missile stocks could have paid dividends for Netanyahu well beyond satisfying public cries for revenge.

But the decision was taken out of Netanyahu’s hands. A few hours after the Israeli teens were buried on July 1, a baby-faced Palestinian named Muhammad Abu Khdeir was dragged off the sidewalk near his East Jerusalem home by Jewish extremists. Israeli police say the men killed the 16-year-old a few minutes later, setting the boy on fire while he was still breathing.

Rioting broke out in Jerusalem within hours, spreading quickly to majority-Palestinian cities across Israel, where 1 in 5 residents is of Arab descent. The July 6 arrest of the Jewish suspects failed to reduce tensions, but a measure of calm was restored by Arab-Israeli business leaders, who in one case formed a line that physically separated protesters and police.

But Hamas proved less temperate, firing scores of missiles from Gaza in what it called solidarity with the martyrs. The pressure on Netanyahu mounted: his Foreign Minister, Avigdor Lieberman, calling for consideration of reoccupying Gaza, ended his hard-right party’s alliance with Netanyahu’s Likud. Finally, after giving Hamas 48 hours to cease firing–and waiting twice as long–Netanyahu ordered the start of the air campaign on July 7, then called up 40,000 reservists to make credible the threat of a Gaza invasion. Actually invading, as Israel did in 2008, would dramatically increase the likelihood of heavier losses on both sides. But even the current campaign creates more than the usual risk of civilian casualties, either from an Israeli air strike in crowded Gaza or from a Hamas rocket that gets past Israel’s Iron Dome missile-defense shield and lands in a school. “The more the situation deteriorates, the more you have a chance for extremists on both sides of getting into these vigilante actions or terrorism,” says Benedetta Berti, an analyst at the Institute for National Security Studies in Tel Aviv.

Jewish extremists continue to roam Palestinian communities both inside Israel and on the West Bank, where a 22-year-old nearly lost his leg on July 5 in one apparent revenge attack; Tariq Aedli woke up bleeding beside a settler road after being grabbed from behind and drugged. After years of largely ignoring settler attacks on the Palestinians it is obliged by international law to protect, the Israeli military has taken the unusual step of posting troops at the exits of the more notoriously militant Jewish settlements.

But that may not be enough. Encouraged by social-media calls for revenge–a Facebook page advocating vengeance against Palestinians collected 35,000 likes in two days–and an established tolerance for hate speech, the real possibility of Jewish terrorism complicates the usual danger that going to war in Gaza will lead to violence on the West Bank. “Of course, if it explodes somewhere, it explodes everywhere,” says Ryad Msaeh, a Palestinian standing beside the Nablus hospital bed of his son, who had been shot in the leg by an Israeli soldier while protesting. “In the end they’re all Palestinians, even if they’re inside the Green Line.”

How bad can it get? Israel would be lucky if the consequences ended with Palestinian Authority President Mahmoud Abbas’ taking his charge of “genocide” to the U.N. Security Council, as he threatened to do July 9. A third intifadeh is not out of the question, especially amid evidence that Hamas had decided to go all out. The Hamas commandos whom army helicopters sliced up on an Israeli beach near Gaza on July 7 appeared intent on massacring residents of a nearby kibbutz. In the first 36 hours of the offensive, Israel struck 550 targets in Gaza, leaving at least 50 dead, and militants launched 165 rockets toward Israel, with only minor casualties.

Still, both Hamas and Israel have continued to negotiate, albeit through the mediation of Egypt, which Hamas badly needs to please. And the militant group already has grounds for declaring a victory of sorts. In 2012, Hamas boasted of activating air-raid sirens in Tel Aviv with its rocket attacks, but this time its missiles reached 40 miles farther up the coast, to Zikron Yaakov.

But another rocket attack says more about the uncertainties at play. This one, launched toward Jerusalem on July 7, approached the home of Mishka Ben-David, a former Mossad agent turned spy novelist who was involved in the botched assassination attempt of a senior Hamas operative in 1997. A neighbor says the crater was 40 yards from the house. Hamas wasn’t aiming at Ben-David–its missiles lack any guidance systems–but when you’re firing blind, anything can happen. That’s a fact both sides should remember.

–WITH REPORTING BY AARON KLEIN/TEL AVIV

Contact us at editors@time.com.

This appears in the July 21, 2014 issue of TIME.

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