JERUSALEM, 27 March 2004 — Israel’s assassination of the leader of the Palestinian group Hamas has boomeranged into economic and political damage to Israel because of Hamas threats of retaliation.

Three days after Israel killed Hamas founder Sheikh Ahmed Yassin in an air strike in Gaza, Israeli media reported Thursday on a number of economic setbacks, attributing them to what they labeled the “Yassin effect.”

A European president and a Spanish basketball team were just the most prominent to cancel trips to Israel. Though Hamas has yet to carry out its threats, tour operators say large numbers of tourists have called off their trips to the Holy Land.

Tourism is Israel’s top foreign currency earner, and the industry had been hard hit by more than three years of Palestinian-Israeli violence. Tourism figures were finally showing an upturn when the Yassin assassination early Monday suddenly changed the security picture.

Israel clamped a closure on the West Bank and Gaza Strip, banning all Palestinians from entering Israel. Also, Israeli security forces were put on high alert, setting up roadblocks on Israeli highways and checking vehicles.

But the precautions only added to the nervous atmosphere, and many Israelis preferred to stay indoors, leaving malls and restaurants nearly empty.

Israel said Yassin was responsible for dozens of Hamas attacks, including suicide bombings that have killed hundreds of Israelis. Since a double bombing March 14 at an Israeli seaport, Israel has declared that it is targeting the entire Hamas leadership.

Many world leaders condemned the assassination, and Romanian President Ion Iliescu canceled a visit to Israel, set to begin Monday.

Also, an Egyptian delegation called off a visit to mark 25 years since the Israel-Egypt peace treaty was signed.

On Thursday, the Israeli basketball champions, Maccabi Tel Aviv, were to face Spain’s Pamesa Valencia in a league game, but the Spanish team refused to fly to Tel Aviv because of security concerns.

European sports officials set a meeting for next week to decide whether to move the European league championship finals out of Tel Aviv. The games are scheduled for late April and early May.

There were also reports of future cancellations. The Israeli daily Ma’ariv said California Gov. Arnold Schwarzenegger, set to visit in May, would not come, but his office said the trip is still on.

The report followed an advisory from the US State Department, counseling US citizens to postpone their travel plans to Israel.

Roy Cimatu, the Philippines special envoy to the Mideast, is to arrive in Israel next week to evaluate the security situation and see if it is necessary to evacuate — or prepare plans for such a measure — the 75,000 Filipino workers in the country.

Still, some Israeli economic officials believe it is too early to give up hopes for better economic times. “We still have no indications of a wave of tourist cancellations over the long term,” said Ami Etgar, a spokesman for the Israel Incoming Tour Operators Association in Tel Aviv.