Hamas remains potent threat to Israel despite muted response to strikes

(Corrects day to Tuesday from Monday, in paragraphs 5 and 11)

By Nidal al-Mughrabi and Emily Rose

CAIRO/JERUSALEM (Reuters) -Israel inflicted serious damage on Hamas with airstrikes this week that killed its Gaza government chief and other top officials, but Palestinian and Israeli sources say the group has shown it can absorb major losses and still fight and govern.

After its main Gaza chief Yahya Sinwar was killed in October, it moved to a leadership council, less reliant on a single figure, Hamas sources said. As its rocket arsenal was reduced, it refocused on guerrilla warfare, while both its military and political wings switched to using human messengers to avoid electronic spying.

The latest Israeli strikes were mainly aimed at weakening Hamas' ability to rule in Gaza, signalling a major new round of military attacks that the group has so far responded to with only a few rockets fired at Tel Aviv.

The violence shattered a weeks-long ceasefire after 15 months of relentless conflict in which Israel tried to destroy Hamas with a pounding bombardment and repeated ground offensives in retaliation for the deadly Oct. 7, 2023 attacks.

Hamas' de facto government head Essam Addalees and internal security chief Mahmoud Abu Watfa were killed by Israeli strikes on Tuesday, adding to a tally of thousands of Hamas fighters lost in the war, including many of its military and political chiefs.

With a full-blown conflict now poised to resume in a volatile Middle East, Hamas' capacity to withstand a renewed Israeli assault will be crucial in determining the timescale of a new conflict and what Gaza will look like afterwards.

Israeli Prime Minister Benjamin Netanyahu has repeatedly said the main aim of the war is to destroy Hamas as a military and governing entity. He has said the aim of the new campaign is to force the group to give up remaining hostages.

Reuters interviews with four sources inside, and close to, Hamas, as well as with Israeli and Palestinian analysts well-versed in the group's abilities and operations, suggest that although it is weakened, Hamas remains a potent adversary.

Sources' accounts of Addalees' own example throughout the war so far - holding meetings, appointing officials, paying salaries and negotiating security for aid deliveries - showed Hamas' ability to retain some control even amid the chaos.

"Hamas is still on its feet. Hamas still governs the territory and the population and Hamas does its utmost to reconstitute itself militarily," said Kobi Michael at Israel's Institute for National Security Studies.

CASUALTIES

Hamas' first response to Israel's renewed airstrikes, which began on Tuesday with its ground assault starting on Wednesday, came with the firing of three rockets at Tel Aviv on Thursday.

The group had previously said it was not responding to give more time for mediators to work out a possible way to continue the ceasefire - something that seems increasingly unlikely.

In the weeks before the ceasefire took effect in January, Hamas killed dozens of Israeli soldiers with hit-and-run guerrilla warfare that was some of the deadliest of the conflict.

"If Israel sends forces deep into Gaza areas then fighting becomes inevitable and Israeli soldiers will begin to get killed," said a source close to Hamas thinking.

Israel says its campaign has significantly reduced Hamas' arsenal of rockets and its ability to operate as a coherent military organisation, and that it has killed around 20,000 fighters.

Hamas disputes that assertion, though it has not said how many fighters it has lost.

Michael Milshtein, a former Israeli military intelligence officer at the Moshe Dayan Center in Tel Aviv, said Hamas had been able to recruit thousands more fighters drawn from the many jobless young men in Gaza.

Meanwhile, despite being cut off from external arms supply and although Israeli operations have hit its internal manufacturing sites, Hamas has proven able to still make new bombs from unexploded ordnance, said Michael.

GOVERNING ABILITY

Inside Gaza, the killing of Addalees and other top figures this week was a significant blow to the group.

"They lost several very senior figures. Essam Addalees was the head of the shadow government in Gaza. But even after the damage they control the street," said Milshtein, describing Hamas as the "dominant player" in the territory.

"There is always someone who will replace him," he added, without suggesting specific candidates.

Addalees' own ability to operate even in the most intense phases of the war underscores the difficulties for Israel.

"He remained at work throughout the war, moving secretly between institutions to oversee work," said Ismail al-Thawabta, who worked under Addalees as head of his office.

A source associated with Addalees said he had been able to move around Gaza discreetly, sometimes in vehicles, sometimes on foot, to meet people. He had mostly communicated with colleagues with messages on paper, the source said.

Addalees and his office even managed to ensure continued salary payments to government workers, the source associated with him and a source close to Hamas said.

"Imagine the difficulty in coordinating the distribution of salaries and getting them to employees in areas across the Gaza Strip where tanks and warplanes operated," the source close to Hamas said, without revealing how this was accomplished.

(Reporting by Nidal al-Mughrabi in Cairo and Emily Rose in Jerusalem. Writing by Angus McDowall, Editing by William Maclean)