By Lee Hockstader
Washington Post Foreign Service
Wednesday, February 18, 1998; Page A15

JERUSALEM, Feb. 17—The militant Islamic group Hamas, which has carried out suicide bombings and other acts of terror against Israel in the past, said today it would strike the Jewish state again if the United States attacks Iraq.

"We will not stand by with our hands tied if the Iraqi people and their children or any Arab or Muslim people are subjected to U.S. military attacks," the armed wing of the group said. "And we will answer this in our special way by hitting the Zionist depth and its monstrous entity."

The threat, made in leaflets distributed to news organizations today in Gaza and the Palestinian-controlled town of Ramallah in the West Bank, is likely to intensify the already severe jitters that have spread throughout Israel.

Fearful of Iraqi retaliation against Israel in the event of an American attack, hundreds of thousands of Israelis have thronged gas mask distribution sites in the last two weeks. In the past few days, Israeli fears also have sparked a run on masking tape and plastic sheeting, materials used to seal off rooms against chemical or biological attack.

There are reports in the Israeli media that ticket sales for trips abroad have increased by 40 percent, and the government is still in the process of importing hundreds of thousands of gas masks to outfit the estimated 1.5 million people -- about a quarter of the population -- who do not yet have them.

As Israelis inch toward panic, Palestinians in the West Bank have continued to mount pro-Iraqi demonstrations in defiance of Palestinian leader Yasser Arafat's ban on such displays. Arafat is worried that a repetition of the mistake he made in 1991 -- siding too closely with Iraqi leader Saddam Hussein -- would antagonize Washington and undercut the chances of progress in the U.S.-sponsored Middle East peace process.

Nonetheless, polls show an overwhelming majority of Palestinians -- in some cases, more than 90 percent -- sympathize with Iraq, and Saddam Hussein is still widely regarded among Palestinians as a hero for having challenged the West and attacked Israel with 39 Scud missiles in the 1991 Persian Gulf War.

Today, hundreds of Palestinian students marched in support of Iraq through the West Bank town of Bethlehem, burning U.S. and Israeli flags and shouting: "Saddam, we want the chemicals!" and "Beloved Saddam, hit Tel Aviv!" Palestinian police formed barricades to block the marchers from reaching an Israeli army roadblock.

The marches have provided political fodder for Israeli Prime Minister Binyamin Netanyahu, who has cited them as evidence that Palestinians are not interested in peace. But the current threat of renewed terror by Hamas poses an even greater danger to Israel.

Hamas was behind the most recent attack against Israel, last Sept. 4, in which eight people, including three terrorists, died in a suicide bombing on a pedestrian shopping street in Jerusalem. Eighteen people, including two bombers, died in another Hamas attack in Jerusalem on July 30.

Arafat is generally believed to be working against such attacks, although there is disagreement about how hard he has worked. He does not have control over Hamas, which has defied him in the past.