Yahad MK Yossi Sarid is demanding that the Knesset Foreign Affairs and Defense Committee investigate the Mossad's failed operation in New Zealand. Sarid said Saturday that the recent unsuccessful operation joins a series of failures by Israel's intelligence service over the past several years.

New Zealand police said Saturday that it will continue its investigation into an attempt by several Israelis to unlawfully obtain one of the country's passports.

John White, deputy commander of the police, said that the police will pursue the investigation in an attempt to bring charges against two other Israelis suspected of involvement in the affair.

Two Israelis, 50-year-old Elisha Cara and Uriel Kelman, 31, were jailed for six months Thursday, after an Auckland court found them guilty of seeking to obtain a New Zealand passport through illegal means and of belonging to a criminal organization. The two were also fined 50,000 New Zealand dollars.

Sarid also recommended Saturday that the Israeli government apologize to the New Zealand government as soon as possible, especially since New Zealand is a country friendly to Israel. He said that Israel has handled the affair in a scornful and arrogant manner toward a small and distant country.

MK Zahava Gal-On (Yahad) said that the monitoring of the Mossad's activities should be regulated, and that she intends to submit a bill proposal similar to the Shin Bet Law, which will regulate the Mossad's authorities.

After the court passed its verdict, New Zealand Prime Minister Helen Clark announced that the two had operated "on behalf of the intelligence services of Israel."

New Zealand also Thursday froze all high-level contact with Israel, and demanded an admission of responsibility from the government for its role in the affair.

A day after the sentencing and the imposition of sanctions, swastikas and Nazi slogans were found gouged around graves in the Jewish section of a cemetery in Wellington. Headstones in the cemetery were also smashed.

New Zealand Foreign Minister Phil Goff on Friday laid out his country's requirements for improved relations with Israel, which include a governmental assurance that such an incident would not be repeated.

Goff told Haaretz on Friday that if Israel wants to restore ties with New Zealand, it must apologize for the passport affair, admit responsibility, provide an explanation and offer an assurance that it would not commit a similar act in the future.

Foreign Minister Silvan Shalom said Thursday that Israel was sorry about the incident, and would do "everything" to restore relations.

But Clark said Israel's offer of an informal apology for the passport affair was not sufficient.

"The ball is in Israel's court as to where it wants to move from here," Clark said on National Radio on Friday. "Three months ago we asked for an apology and an explanation. That has not been forthcoming."

She said it was possible Israel would wait until the two men had served their sentences before offering any apology.

16 graves attacked in historic Wellington cemetery (Click here to join a discussion on anti-Semitism) Sixteen graves were attacked overnight in the Jewish part of a cemetery in Wellington that dates to the 1880s, a city council spokesman said.

"Someone's used some sort of stick or tool to gouge swastikas into the grass around the graves. Words like 'Sieg Heil' have been scratched into the footpath," he said. Sieg Heil was a common Nazi salutation.

Wellington Botanic Gardens manager David Sole said the Jewish section of Bolton St. cemetery near the center of the New Zealand capital was a sea of broken marble and overturned tombstones when he visited Friday morning.

"People are speculating the attack may have been sparked by the two Israeli men and the passport case," a council spokesman said, speaking on usual condition of anonymity.

The head of the New Zealand Jewish Council said there was a direct link.

"I think there is a direct connection between the very strong expressions against Israel and people here feeling they can take it out on Jews," David Zwartz told New Zealand's National Radio.

"It seems to me Israel-bashing one day, Jew-bashing the next day."

Rabbi Antony Lipman said the desecration on the graves, some of them 100 years old, had shocked New Zealand's Jewish community.

"We hope Wellington is not going the way of some other communities in the world, where this has unfortunately become a frequent occurrence," he said.

Clark condemned the desecration, but said any link to the passport affair was "not an open and shut" matter.

"We condemn without reservation people desecrating graves - it is a horrible thing to do," she told National Radio.

New Zealand has small Jewish communities, but has no history of anti-Semitic behavior, with only occasional acts of vandalism of Jewish buildings.

New Zealand suspends top-level visits Under the sanctions, all Israeli officials wishing to enter New Zealand are now required to acquire entry visas prior to arrival.

Clark also announced that New Zealand was unwilling to receive President Moshe Katsav during a visit that he planned to Australia and New Zealand in August.

The visits of senior delegations to and from New Zealand have also been canceled, and the credentials of the new Israeli ambassador will not be approved, while contacts with the local honorary consuls of Israel in New Zealand will be severely limited.

Goff said, "We know this [the Mossad role in the affair], the government of Israel knows this and it knows why we know" that they are agents of the Mossad.

The minister suggested in an interview with Israel Radio that the arrest of the two Israelis was not an isolated incident and hinted at claims made to Haaretz by New Zealand police that the Mossad had allegedly sought to acquire as many authentic passports as possible in a long-term operation.

The New Zealand sources pointed to the fact that Cara, who claims to be a tourist agent based in Australia, entered New Zealand 24 times during the past three-and-a-half years.

Australian daily The Age reported that Canberra had also initiated an operation to uncover whether its sovereignty had also been compromised by alleged Israeli agents.

The sanctions announced by the government of New Zealand had been decided in March, soon after the two men were arrested. The government of New Zealand refrained from making the sanctions public to avoid interference with the trial of the two suspects.

Foreign Ministry sources said Thursday night that the policy of ambiguity regarding the affair was imposed on them by the Prime Minister's Office and the Mossad.

As a result of the pressure, the sources say, the handling of the matter was left to a low-level diplomat, Orna Sagiv, who is responsible for relations with New Zealand and operates from Israel's embassy in Australia.

Sources in New Zealand told Haaretz that the sanctions are purposely directed against the government of Israel and not the Israeli people.

The strongly-worded announcement of the government of New Zealand stated: "Israel is a country with which New Zealand has had friendly relations for a long time. The government of New Zealand relates to the activities of the Israeli intelligence agents not only as utterly unacceptable but also as a violation of the sovereignty of New Zealand and international law."

"New Zealand condemns without reservation these actions by agencies of the Israeli government," Clark said in the statement. The Israeli agents attempted to demean the integrity of the New Zealand passport system and could have created considerable difficulties for New Zealanders presenting their passports overseas in future," Clark said.