Israel's prime minister, Benjamin Netanyahu, has only recently and grudgingly accepted the idea of an independent Palestinian state next to Israel. With Egypt in flux, efforts to bring this about may soon go into deep freeze.

Israel's main concern is whether its peace agreement with Egypt, which underpins its security in a hostile Arab world, can survive without President Hosni Mubarak at the helm.

The tumult in Egypt has plunged Israel into dismay, arousing fears that Islamic radicals, backed by Iran, are about to score another victory, as Hezbollah has done in Lebanon and Hamas in Gaza — even though the anti-government protesters in Egypt are led by secular activists. While Egypt's main fundamentalist group the Muslim Brotherhood has a role, it has no known links to Iran.

At this point, Israeli leaders can only guess what will happen in Egypt now that Mubarak has said he won't run for re-election. Mubarak is Israel's bridge to the Arab world and a mediator with the Palestinians. Gaza borders Egypt's Sinai desert, making Egypt the guardian of its western border.

Until the picture clears, Netanyahu is unlikely to rush into a deal with the Palestinians that creates even more uncertainty on his doorstep by turning over territory to Palestinian President Mahmoud Abbas, a man Israelis see as well intentioned but weak.

"A peace on paper does not guarantee peace in practice," Netanyahu said in a speech to parliament on Wednesday.

Under the 1979 treaty with Egypt, Israel's first with an Arab country, Israel withdrew from the Sinai peninsula, which it had captured from Egypt in the 1967 Mideast war.

A demilitarized Sinai allowed Israel to slash military spending and troop levels along the border. The return of the massive, U.S.-supplied Egyptian army to potentially just 65 kilometers (40 miles) from Tel Aviv would send shudders through Israel's military establishment.

To the east is Jordan, where street protests forced King Abdullah II to sack his Cabinet this week and promise reforms. Jordan, the other country with whom Israel has a peace treaty, separates Israel and the West Bank from Iraq. Beyond lies Iran, which says Israel shouldn't even exist.

Some analysts argue that now is the time to strike a deal with the Palestinians and take some of the sting out of the turmoil sweeping Arab countries. But Israelis will prefer caution, said Aaron David Miller, a former U.S. peace negotiator who is now at the Woodrow Wilson International Center for Scholars, a Washington think tank.

"The logic for Israel will be 'We need to be very careful with respect to anything we do,'" he said in an interview.

He said the best-case scenario foresees a "fairly lengthy delay" in getting peace efforts restarted. "At worst, it will make it very difficult to hold serious negotiations or reach any agreement any time soon."

Netanyahu warned his parliament that Islamic radicals, backed by Iran, could exploit the chaos in Egypt, a common theme heard here since the unrest erupted last week.

He also repeated his call for peace talks with the Palestinians, but reiterated his security concerns and acknowledged the gaps may be too wide to bridge. A Palestinian state, even if Israel got to keep its largest settlements in the West Bank, would leave this country much narrower at its populous waistline.

"We need security on the ground, not only for peace, but also in case that peace falls apart. In the Middle East nobody can guarantee the stability of regimes," Netanyahu said.

Among his demands is that Israel retain a military presence in the West Bank after a Palestinian state goes up. The Palestinians flatly reject this.

President Barack Obama has made Israeli-Palestinian peace a priority, and the lack of progress so far has hurt his credibility here. Israeli media are full of commentaries criticizing Obama's response to the Egypt crisis. They accuse him of abandoning an important ally and claim his push for more democracy in the Mideast is naive.

Netanyahu warned in his speech that Islamic groups have already taken over by democratic means in Iran, Lebanon and Gaza.

Binyamin Ben-Eliezer, a friend of Mubarak and until last month a member of Netanyahu's Cabinet, accused Obama of dumping a "courageous" friend. He warned that elections in Egypt would likely bring the fundamentalist Muslim Brotherhood to power. "I don't think the Americans understand yet the disaster they have pushed the Middle East into," he told Israel Army Radio.