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The shadow war between Iran and Israel has been exposed. What happens next?

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Iran’s unprecedented attack on Israel early Sunday marked a change in approach for Tehran, which had relied on proxies across the Middle East since the start of the Israel-Hamas war in October. All eyes are now on whether Israel chooses to take further military action, while Washington seeks diplomatic measures instead to ease regional tensions.

Iran says the attack was in response to an airstrike widely blamed on Israel that destroyed what Iran says were consular offices in Syria and killed two generals with its paramilitary Revolutionary Guard earlier this month.

Israel said almost all the over 300 drones and missiles launched overnight by Iran were shot down by its anti-missile defence system, backed by the U.S. and Britain. The sole reported casualty was a wounded girl in southern Israel, and a missile struck an Israeli airbase, causing light damage.

Still, the chief of Iran’s Revolutionary Guard called the operation successful.

Iran has managed to strike a balance between retaliating publicly for the strike in Damascus and avoiding provoking further Israeli military action at least initially, which could lead to a much wider conflict, said Mona Yacoubian, vice president of the Middle East and North Africa center at the U.S. Institute of Peace.

“Both (Iran and Israel) are able at this point to claim victory and step down off the precipice, particularly since there were no Israeli civilians killed,” Yacoubian said.

The world was still waiting, however, for the result of an Israeli War Cabinet meeting on Sunday. Israeli hard-liners have pushed for a response, but others have suggested restraint, saying Israel should focus on strengthening budding ties with Arab partners.

“We will build a regional coalition and collect the price from Iran, in the way and at the time that suits us,” said Benny Gantz, a member of the War Cabinet.

Analysts say Iran sent a message that it would be willing to escalate and change its rules of engagement in its shadow war with Israel.

“It’s a warning shot, saying that if Israel breaks the rules, there are consequences,” said Magnus Ranstorp, strategic adviser at the Swedish Defense University.

Iran’s attack has further stoked fears of the war in Gaza causing regional havoc.

But Iran maintains that it does not seek all-out war across the region. Foreign Minister Hossein Amirabdollahian said in a post on X, formerly Twitter, that Iran has “no intention of continuing defensive operations” at this point unless it is attacked.

Iran stressed that it targeted Israeli facilities involved in the Damascus attack, not civilians or “economic areas.”

After Israel began its offensive in Gaza against Hamas, Iran-backed groups were involved militarily while Tehran sat on the sidelines. Lebanon’s Hezbollah group fired rockets into northern Israel. Yemen’s Houthi rebels attacked Western ships on the Red Sea. An umbrella group of Iran-backed Iraqi militias attacked U.S. military positions in Iraq and Syria.

Now, Tehran is “willing to up the ante” without relying on proxies, said the director of the Carnegie Middle East Center, Maha Yahya.

Still, Iran only went so far.

“They gave enough warning that this was coming, and I think they knew that they (the drones and missiles) would be brought down before they reached Israeli territory,” Yahya said.

She also noted that the recent mounting pressure on Israel over its conduct in Gaza has now shifted to deescalating regional tensions instead.

Yacoubian says Washington has a critical role to play in avoiding further escalations.

Israel taking further military action does not seem popular among its allies including the United States, said Eldad Shavit, who heads the Israel-U.S. Research Program at Israeli think tank the Institute for National Security Studies.

White House national security spokesman John Kirby told NBC that President Joe Biden does not want an escalation in the regional conflict or a “wider war” with Iran, and is “working on the diplomatic side of this personally.”

Urgent meetings of the G7 — the informal gathering of industrialized countries that includes the United States, United Kingdom, and France — and the U.N. Security Council were being held Sunday.

G7 meeting participants in a statement unanimously condemned Iran's attack, saying “we stand ready to take further measures now and in response to further destabilizing initiatives.”

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Associated Press writers Josef Federman in Jerusalem, Abby Sewell in Beirut, Amir Vahdat in Tehran and Thomas Adamson in Paris contributed to this report.

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