(Bloomberg) -- Iran’s weekend attack on Israel with more than 300 missiles and drones marks a perilous turn for a fragile region. It was an unprecedented action, the first strike on the Jewish state from Iranian soil. Iran declared it a massive success.

Yet with help from the US, UK and other allies, Israel stopped almost every one of the missiles and drones launched. No one was killed, and the damage minor. It too declared it an enormous success.

Both powers say their rivalry has shifted. Iran called it a “new equation” in which Israel had to know it could be attacked again; Israel said it will hit any nation that attacks it.

Group of Seven leaders were due to discuss the events later Sunday, as was Israel’s security cabinet. Its allies, including the US, are eager for it to show restraint, and not raise the stakes further.

Israeli soldiers at the train station in Tel Aviv, April 14.Photographer: Kobi Wolf/Bloomberg

Many in Israel are open to that approach, partly because Iran’s attack was so unsuccessful, reducing the need for a quick show of force. It’s also because after weeks of scorn from Washington over the conduct of the war against Hamas in Gaza, Israelis felt a warm embrace once more. And that was comforting.

“Israel acted tonight for the first time as part of a coalition,” noted Tamir Heyman, a former chief of military intelligence. “That coalition is the answer to the day after the war in Gaza.”

But the forces keeping Prime Minister Benjamin Netanyahu in office — those to his right — have a different idea. They say that if Israel doesn’t respond painfully and soon, Iran and its proxy militias across the region are likely to see weakness.

“Now we need a crushing attack,” said National Security Minister Itamar Ben Gvir.

WATCH: Video released by the IDF shows what it said was the interception of Iranian missiles and UAVs.Source: IDF

Iran sent the missiles in retaliation for the April 1 killing of Iranian military officers in Damascus, widely attributed to, but not acknowledged by, Israel. Many saw Iran’s early and frequent publicizing of its attack as evidence that it wanted to make a point rather than start a war. Shortly after launching its attack, Iran’s mission to the United Nations said “the matter can be deemed concluded.”

Sima Shine, a former research director of Israel’s Mossad spy agency, said she believes Iran took into consideration Israel’s air defense system and wasn’t looking to inflict major casualties.

But Israeli military spokesmen said the arrival of more than 100 ballistic missiles toward the end of the attack was not an act of theater; they could have caused enormous death and destruction if Israel didn’t have such an advanced air defense system and a strong set of alliances.

WATCH: Defense Minister Yoav Gallant says hundreds of missiles and drones fired by Iran were blocked “with great success.”Source: APTN

Part of any disagreement over how to proceed stems from the difference between how the Saturday night attack is seen, whether a retaliation for Damascus or part of Iran’s ongoing efforts to make life unbearable for Israel.

For most people in Israel, Iran is the puppet master of its regional foes, starting first and foremost with Hamas, the Islamist Palestinian group that attacked it in October, killing 1,200 and abducting 250 more, threatening the country to its very core.

Israel responded with an unforgiving war that is still underway. Some 33,000 Palestinians have been killed, according to Hamas, considered a terrorist organization by the US and European Union.

More than 100 hostages have yet to be freed and thousands of Hamas fighters are still entrenched in the southern Gaza city of Rafah.

Avi Melamed, a former Israeli intelligence officer who’s written extensively on Iran, said he hopes that after the Iranian attack, the US will be more sympathetic to Israel’s insistence on attacking Rafah and dismantling Hamas.

“If Hamas sees Iran’s attack and thinks it is still going to stay on its feet, that is bad news for everyone,” he said.

Finance Minister Bezalel Smotrich made a similar point in a post on X, saying, “It’s time to learn lessons, change direction, continue to Rafah now and restore full Israeli control all over Gaza.”

The US has been warning against such an operation because of the hundreds of thousands of civilians sheltering in Rafah and the growing humanitarian crisis in Gaza.

WATCH: UK Prime Minister Rishi Sunak called Iran’s assault “dangerous and unnecessasy.”Source: Bloomberg

Hamas just rejected Israel’s latest offer for a cease-fire and exchange of hostages for prisoners, further evidence for some that Iran’s allies are feeling emboldened rather than frightened.

But Amos Yadlin, a former director of Israeli military intelligence who advises opposition leader and war cabinet member Benny Gantz, sees it differently.

“Last night’s attack could lead to a strategic change in the war and even to its end,” he said. “Hamas has been beaten hard enough, Israel can now agree to a deal on the return of all its hostages in exchange for a permanent cease-fire and withdrawal from Gaza and win back its international legitimacy.”

The other dilemma for Israel is its northern border with Lebanon where it’s fighting Iran-backed Hezbollah, and tens of thousands of civilians on both sides have been forced out of their homes. Israel sees Iran behind this conflict as well and says it must be able to return its citizens to their homes — either by diplomacy or by force.

So as it contemplates how to respond to Iran’s attack, Israel worries about not only its enemy hundreds of miles away but also those right on its borders.

--With assistance from Galit Altstein and Marissa Newman.

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