President Bashar Assad boasts that Damascus is "the capital of resistance," a claim borne out by the presence here of Hamas leaders and a host of other radical Palestinian groups.

But the killing of Imad Mughniyeh, one of America's most-wanted fugitives, in the Syrian capital shows how costly the regime's traditional hospitality toward Arab hard-liners can be.

Mughniyeh's presence on Syrian soil was a deep embarrassment to Damascus, fueling U.S. accusations that the country allows extremists of many stripes — Palestinian militants, Hezbollah operatives and Iraqi insurgents — to operate freely.

And the fact that someone was able to set off a car bomb Tuesday in an upscale district of the capital to kill Mughniyeh is a blow to the reputation of Syria's feared security services, which are a cornerstone of the regime's autocratic control of the country.

It could also raise questions over the strength of the regime's grip.

Mughniyeh, Hezbollah's one-time security chief, was a terror icon of the 1980s and 1990s, linked to the killings of hundreds of Americans, French, Jews and Israelis in bombings and airline hijackings over two decades. He had dropped almost completely from sight for close to 15 years, but Western intelligence officials say he remained a significant figure in Hezbollah and continued to be a danger.

Syria has long been on Washington's list of states supporting terrorism, and the Bush administration has sought to isolate the Assad regime for its support of Hezbollah guerrillas and radical Palestinian groups. Its attempts intensified after the 2005 assassination of former Lebanese prime minister Rafik Hariri, which many in Lebanon blame on Syria.

President Bush stepped up pressure on Syria again Wednesday, ordering new sanctions to punish officials in Damascus for alleged efforts to undermine stability in Iraq and meddle in Lebanon's sovereignty and democracy. The order did not specifically name any officials.

Syria's allies Hezbollah and Iran blamed Israel for the assassination, though Damascus has not said who it believes was behind the attack. Mughniyeh presumably had many enemies, and Israel has denied any role. But if the Jewish state was behind the killing, it would be the second time in recent months that Syria's top enemy has been able to strike freely on its territory.

In September, Israeli warplanes bombed a target in eastern Syria that Damascus said was a military facility, though some reports contended it could have been a nascent nuclear facility.

A Western diplomat based in Damascus said the incident was a double embarrassment for Syria — "on account of (Mughniyeh) being here and because they could not protect him." The diplomat spoke on condition of anonymity because of the sensitivity of the subject.

"The Syrian security agencies have a lot of explaining to do as to how a hit like this could be carried out in a city that's remarkably secure," said Jon Alterman, head of the Middle East program at Washington's Center for Strategic and International Studies.

"Some in the security services were either caught unaware or are complicit in the killing," he said.

The assassination came at a time when Syrian security forces have been cracking down on pro-democracy activists. At least 12 activists have been rounded up in recent weeks, including a former lawmaker suffering from cancer.

Syria has seen violence by Islamic extremists in recent years, with security forces clashing with al-Qaida-inspired militant groups on several occasions. In September 2006, Islamic militants tried to storm the U.S. Embassy in Damascus in an unusually brazen attack in which three assailants and a Syrian guard were killed.

Most of those attacks were linked to Jund al-Sham, an al-Qaida offshoot that was established in Afghanistan. Militants often denounce Assad's secular regime and have at times called for its overthrow.

But al-Qaida has not made a concerted effort to act in Syria, not because of the strength of its security services, but because of Damascus' anti-Western stance, according to Syria expert Joshua Landis.

"It's not just because the police are good. Syria's been given a pass by al-Qaida and others because of its anti-American position, but Americans and the West don't want to admit that because they don't want to admit that there's a cause and effect," said Landis, director of the Center for Peace Studies at the University of Oklahoma. He also maintains a widely read blog on Syria.

Syria has long been accused of allowing Muslim militants to use its territory to cross into Iraq, where they take part in attacks against U.S. and Iraqi forces. It dominated neighboring Lebanon for three decades until it was forced to withdraw its military in 2005. But Damascus has regained much of its influence, using Hezbollah to stymie Lebanon's U.S.-backed government.

Mughniyeh's presence in Damascus will only hurt Syria's image at a time when it has been emerging from its international isolation. European, American and Arab officials have increased their visits to the country after years of avoiding it.

But Syria is unlikely to give up its support for militant Palestinian leaders and Hezbollah, a cornerstone of its foreign policy for decades, giving it considerable leverage in the region.

Assad was apparently referring to Syria's role as a haven for radical Arab groups when he credited Damascus for the spread of a "culture of rejection to all traces of colonialism, old and new" in an address last month. He branded the city as "the capital of resistance."