JERUSALEM, Jan 31 (Dan Williams/ Reuters) - A Hamas commander killed in Dubai played a key role in smuggling Iranian-funded arms to Gaza, Israeli security sources said on Sunday, while refusing to comment on accusations that Israel was behind his death.

Hamas said on Friday that Israel's Mossad spy agency had assassinated Mahmoud al-Mabhouh in his hotel room on Jan. 20, a possibility police in the United Arab Emirates did not rule out, though they said they suspected a foreign criminal gang.

Israel's government would not officially comment, but its media were unanimous in linking Mabhouh to the Gaza arms supply.

One Israeli security source said on Sunday Mabhouh had been key to Hamas efforts to smuggle rockets and other arms into his native Gaza Strip, ruled by the Palestinian Islamist faction and whose borders with Israel and Egypt are under blockade.

He was a strategic asset for Hamas when it came to its armament by Iran, the source said. Israel accuses Iran of supplying weapons to Hamas by sea and land routes such as Sudan and Egypt. Iran calls its support for Hamas diplomatic only.

Hamas officials have declined to say what Mabhouh, who had long lived in the Syrian capital Damascus, was doing in the Gulf or what his role was. They called him a senior military figure and one Hamas source said he was working right up to his death.

Destroying Hamas's rocket arsenal, and securing foreign help in stopping smuggling, were among the declared aims of Israel's war on Gaza a year ago. Egypt has since begun erecting a barrier to block Palestinian smuggler tunnels along its Gaza frontier.

In its first announcement of Mabhouh's death on Friday, Hamas officials in Damascus said he had long felt he could be targeted in retaliation for his involvement in the 1989 abduction and killing of two Israeli soldiers.

Mossad is widely believed to have stepped up covert missions against Hamas, Lebanon's Hezbollah militia, and Iran's nuclear project. Among killings attributed to Mossad were that of Hezbollah commander Imad Moughniyeh in Damascus two years ago.


SHADY RELATIONSHIPS

A former Mossad officer, Ram Yigra, said he had no knowledge of the circumstances of Mabhouh's death but suggested the Hamas commander may have fallen foul of arms dealers.

In the end of the day, Mr. Mabhouh was into arms smuggling, which means shady relationships, he told Israel's Army Radio.

It's certainly reasonable to assume that the one who took him out was one of his various business partners, because such business does not happen without a lot of money being pocketed.

A brother of Mabhouh brushed off that theory.

He had no problems. He had no fight. He wasn't involved in any gang. He wasn't involved in any crime, Fayek al-Mabhouh told the radio station from Gaza. So who had an interest in killing him? Israel.

Yigra noted the varying accounts of Mabhouh's death, which included a UAE newspaper report that he had been tortured by his killers, Palestinian poisoning allegations and a suggestion by Hamas official Mahmoud al-Zahar that the assassins accompanied an Israeli cabinet minister who visited Abu Dhabi on Jan. 15-17.

The UAE does not have a peace treaty with Israel but has hosted Israeli officials and does business with Israeli firms.

Israel rocked relations with Jordan when assassins botched an attempt to poison Hamas leader Khaled Meshaal in Amman in 1997. Ex-spy Yigra said Mossad had learned its lessons about the need for discretion:

When there cannot be foul-ups, then the thing is done quickly -- and not in the course of torture and suchlike. And using visiting politicians (as cover) is not done.