Holocaust-related films in Israeli cinema appear in several cycles. The 1980s cycle, which I call Shadow Cinema, expresses ambivalence and guilt and professes a perverse loyalty to a wound that will not heal and to the dead that have never been buried. The analysis of certain junctures in these films brings forth an unexpected analogy between the Sabra new Jew and the Nazi. I argue that these films echo a deeply ingrained recognition that the liquidation of the Diaspora sought by Zionism through immigration of millions of Jews to Palestine, was actually achieved by Nazi Germany through extermination of those same millions. Such inadvertent conflation must have elicited guilt feelings in the Jewish Yishuv in Palestine that had endorsed the "Negation of the Diaspora." The State of Israel, heir to the Yishuv, has inherited these guilt feelings. Israel has unwittingly engulfed itself in guilt for the destruction of the Jews by the Nazis. This tragic sense of Zionism has been in keeping long enough to have sunk in and made Israeli Jews carry indelible guilt vis-à-vis the victims of the Holocaust. Israel lives in a tangled "dead-end future," obsessed with endless bleeding and bloodletting to expiate the six million dead for whose death it innocently and unconsciously puts the blame on itself.