One day after a Palestinian suicide bomber killed nine people  in front of a Tel Aviv fast-food restaurant during the Jewish holiday of Passover on Monday, the prospects for peace in the Middle East look bleaker than ever. It was the deadliest bombing in over a year and the first since the radical Islamic group Hamas took over the Palestinian government after elections in January. But instead of condemning the attack, a representative of Hamas said it was a legitimate response to Israeli "aggression." The comment has sparked outrage in Israel and throughout the international community. Many had been hoping that Hamas -- considered a terrorist organization by Israel, the United States and the European Union -- would become more moderate after winning the election and would recognize Israel's right to exist and foreswear violence.

The terror group Islamic Jihad claimed responsibility for Monday's attack. But the Israeli government on Tuesday said that it holds the Hamas-led government ultimately responsible even though Hamas has observed a year-long truce. Israel said it was considering designating the Palestinian Authority an "enemy entity" -- a designation which could lead to direct military strikes against it. Israel's ambassador to the United Nations Dan Gillerman said a new "axis of terror" was forming including Iran, Syria and the Hamas government in the Palestinian territories.

The escalation comes as a number of major international donors have cut their financial aid for the Palestinian Authority. The refusal to condemn the latest suicide bombing will certainly make it unlikely that many will resume supporting the cash-strapped Palestinians.  But there is a risk that Hamas will turn towards Iran -- which backs Islamic Jihad and recently pledged $50 million in aid to the Palestinians.

Some parts of the German press had held out hope that Hamas could be cajoled into backing peace efforts with Israel. But on Tuesday, most commentators now consider the group to have now put itself beyond the pale, boding ill for the Middle East.

The center-left Süddeutsche Zeitung believes that the latest tragic events in the region make clear that the Palestinian Authority is being led by a terror group. "Hamas no longer leaves any doubt about its intentions," writes the paper, pointing out that the failure to condemn the attack will only strengthen the Israeli intention to seal itself off from the Palestinian territories. "What else can Israel do other than to unilaterally separate from its Palestinian neighbors that declare murder its raison d'etat." Sadly, the paper concludes, the diplomatic isolation and financial difficulties certain to hit the Hamas-led government will only push the Palestinians further into the arms of Iran and its Israel-hating President Mahmoud Ahmadinejad.

The conservative Frankfurter Allgemeine Zeitung calls into question the US and EU strategy of "starving" Hamas into submission by cutting aid. It hasn't encouraged the group to foreswear violence or recognize Israel's right to exist. The latest attack in Tel Aviv and the financial pledges from Iran and Russia have only confirmed the skeptics. "The Palestinian territories appear more likely to descend into chaos -- with all the side-effects for Israel -- before Hamas will be forced to kowtow to the peace process," opines the daily. "At the moment Hamas isn't even in the position to guarantee a cease-fire."

The centrist Berlin daily Der Tagesspiegel focuses on Iran's dangerous influence in the region. First Tehran offers aid to prop up the Hamas government and then the Iran-backed Islamic Jihad carries out a deadly suicide attack. "So were those calling for continuing EU payments to Hamas in order to avoid pushing them closer to other radicals in the region right?" asks the paper. Noting that Iranian support for terrorism against Israel is nothing new, Der Tagesspiegel writes that the $50 million pledged for the Palestinian Authority by Tehran is not even enough to keep it afloat for a month. "Europe should therefore keep its nerve and stick to its demand for the recognition of Israel. Anything else would be unthinkable to ask of Europe's taxpayers."