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BERN — It seems ironic that the latest Mossad fiasco took place in Switzerland.

For more than a year, Switzerland has suffered strained relations with Israel and the larger Jewish world over allegations that Swiss banks helped bankroll the Nazi war effort and hoarded the wealth of Jews who opened secret accounts here during the Holocaust era.

It is true that Switzerland and Israel have cooperated closely on international security issues and are likely to continue to do so after all the publicity surrounding the failed Mossad operation — which neither side desired — dies down.

In Israel, the incident proved to be the catalyst for the resignation of Mossad head Danny Yatom. Ephraim Halevy, a former deputy head of the foreign intelligence service, was named Wednesday to replace him.

The operation was foiled last month when police surprised five Mossad agents attempting to bug an apartment in a Bern suburb.

The apartment was believed to belong to a suspected Hezbollah operative who was thought to be helping the fundamentalist movement plan terror attacks on Jewish and Israeli targets in Switzerland.

But according to a report in the London Times on Tuesday, the bugging operation may have been only a cover story. An unidentified Mossad officer based in Brussels told the Times that the agents were on a mission to assassinate two people — one of them the suspected Hezbollah operative — who were suspected of helping the Islamic militant group acquire chemical and biological weapons.

One of the Israeli agents was arrested, and the other four were released after being detained briefly. There was speculation here this week that the detained Mossad agent would be expelled soon, as Swiss authorities sought to put an end to the affair.

Just the same, the affair may have repercussions on the seemingly unrelated issue of Switzerland's activities during the war years.

Last year, as newly released archives painted an increasingly dark picture of Swiss activities during World War II, there were repeated backlashes against local Jews — and the international Jewish community — for what some Swiss citizens perceived as a smear campaign against them.

It seems likely, at least among those already angered by the perceived Jewish onslaught, that the Mossad operation would further fuel their reactions.

"Of course, the attack against Switzerland will have some influence in the country's stance against the demands of Jewish organizations," a high-ranking Swiss diplomat who serves as an adviser to President Flavio Cotti was reported as saying at a dinner for members of the media.

"In the future, we will be able to turn back such demands more forcefully," the diplomat added. He was presumably referring to international efforts to force Switzerland to take further steps to make reparations for its wartime actions.

Swiss banks have already established a Holocaust Memorial Fund totaling about $190 million, some of which has already been distributed to Holocaust survivors in Eastern Europe.

Switzerland is scheduled to hold a controversial referendum later this year regarding the establishment of a separate $7 billion foundation for victims of disasters, presumably including the Holocaust.

It is unclear whether the fallout from the Mossad episode will affect the referendum's outcome.

A spokesman for the Swiss Foreign Ministry denied that the Mossad fiasco would affect how Switzerland deals with allegations regarding its wartime behavior.

"These are two different issues," said Franz Egle. At the same time, he added, they could indeed become intertwined by some officials — but not by anyone in "our ministry."

Meanwhile, Israel issued a formal apology last Friday for the Mossad operation, but stopped short of pledging that the foreign intelligence agency would refrain from future actions on Swiss territory.

Eitan Ben-Tsur, the director general of Israel's Foreign Ministry, expressed "Israel's regrets over the incident and the complications caused as a result to the Swiss government."

Ben-Tsur also wrote that "terror presents a continuous threat to the security of Israel and its citizens as well as to the peace process and stability" in the Middle East.

The letter, which Switzerland had demanded, received a lukewarm reception in Bern.

"President Cotti has taken note of the apology from the Israeli government and has called it a positive step by Israel," a Swiss Foreign Ministry spokeswoman told reporters in Bern. "Nonetheless, the act remains a severe and unacceptable violation of Swiss sovereignty."

She added that Cotti was still deciding whether he would go ahead with a visit to Israel that had been planned for May.

The Mossad operation was launched after Israel received information that the Iranian-backed fundamentalist Hezbollah movement was planning a terror attack on Jewish targets in Switzerland, including the Israeli Embassy, according to newspaper reports.

The failed operation was believed to be the straw that broke the professional back of Mossad head Danny Yatom, who resigned last week. Yatom had already come under fire from a government-appointed commission in connection with another botched Mossad operation — an assassination attempt on a Hamas official last September in Jordan.

The target of the Mossad operation in Bern was Abdallah El-Zein, a 32-year-old Lebanese national.

He reportedly helped coordinate Hezbollah activities in Europe and maintained close contacts with the Iranian Embassy in Switzerland. But one Israeli newspaper quoted the man's former wife as saying that he had not lived in the apartment building targeted by the Mossad for four years.