Beyond the immediate escalation, the recent Palestinian attack on an Israeli army outpost near the Gaza border raises serious questions about Israel's security and foreign policies.
Right-wing politicians argue that the incident, coupled with months of incessant rocket fire from Gaza on Israeli civilians, shows that the army has lost its deterrent capacity and that it will take a massive, sustained operation in Gaza to restore it.
Israeli Prime Minister Ehud Olmert's plan for a major unilateral withdrawal from the West Bank also is under fire, with some pundits maintaining that the latest turn of events will further erode public confidence in his pullback strategy.
The attack, which left two Israeli soldiers dead and seven wounded, as well as one soldier kidnapped by the terrorists and brought back to Gaza, also highlighted sharp differences on the Palestinian side. It came just days before Palestinian factions were set to reach agreement on a document meant to pave the way for negotiations with Israel and was widely seen as an attempt to torpedo the deal. It also raised questions about the limits of power of both Palestinian Authority President Mahmoud Abbas and Prime Minister Ismail Haniyeh.
With many splinter terrorist factions acting independently or taking orders from Hamas' more radical leadership abroad, the incident raised another fundamental question: Does any Palestinian leader have enough domestic clout to deliver on a deal with Israel?
Israel's response was an attempt to address some of these key issues. By sending ground forces into Gaza and making sweeping arrests of Hamas Cabinet ministers and legislators in the West Bank, Israel significantly raised the stakes in its Sisyphean struggle against fundamentalist Palestinian terror. As the military response to the kidnapping of Cpl. Gilad Shalit unfolded, it became clear that Israel's war aims went far beyond the return of the abducted soldier. Dubbed "Summer Rains," the first major military operation since Israel's withdrawal from Gaza last year was intended to obtain Shalit's release, stop Qassam rocket fire on Israeli civilians, restore Israel's deterrent capacity, cripple Hamas politically and create conditions for an effective cease-fire.
Israel's government was under strong domestic pressure to take tough action. The soldier's abduction came after months of incessant rocket fire on the border town of Sderot, where residents went on a hunger strike to protest the government's failure to protect them.
However, that was not the only reason for the government's new hard line. Olmert also wanted to restore dwindling public confidence in his plan for a large-scale unilateral withdrawal from the West Bank. By launching a major military operation, he was testing the government's thesis that withdrawal from territory gives Israel considerable freedom of action if terror continues from the areas handed back. If that equation is seen to work in Gaza, the prime minister believes the public will be more amenable to a similar pullback from the West Bank.
Though there had been prior intelligence warnings before the Palestinian attack that sparked the crisis, the Palestinian gunmen surprised the Israelis early by attacking from the Israeli side and not the Gaza side of the outpost. Eight Palestinian militiamen infiltrated through a recently dug 300-yard-long tunnel, coming out well inside Israeli territory.
They then turned back toward the border, firing at the Israelis who were facing Gaza. Two attackers were killed, while the others made it back to Gaza, taking Shalit with them.
Israel demanded Shalit's immediate and unconditional release, but the abductors insisted on the release of all Palestinian prisoners under age 18 and all Palestinian women prisoners in Israeli jails -- in return merely for information on Shalit.
The Palestinian leadership was divided. Abbas, who leads the Fatah movement, ordered a search for the soldier to hand him back to Israel. Haniyeh of Hamas also favored a speedy resolution of the crisis. Both realized that they had been presented with a chance to win diplomatic points and alleviate international sanctions against the Hamas led-government.
When Israel withdrew from the Gaza Strip last summer, it evolved a new military doctrine based on deterrence, rather than occupation. The thinking was that with the occupation of Gaza finished, Israel would have international backing to respond with overwhelming force to any attack on sovereign Israeli territory. However, this failed to create a deterrent balance.
For months Palestinians have been firing Qassam rockets at the town of Sderot. When Israeli retaliatory shelling kills Palestinian civilians, the international outcry has been resounding.
Right-wing politicians pressed the government to launch a large-scale attack on Gaza to restore the army's deterrence. However, it is by no means clear that Israel's use of force will have the desired effect.
Israeli left-wingers argue that it could simply spawn more violence and terror. For example, they ask, what will happen in Gaza when Israel leaves: Will Palestinian forces loyal to the moderate Abbas impose order and cross-border quiet or will chaos reign, with more terror against Israel? Already Palestinian radicals are threatening megaterror attacks in Israel or on Israeli targets abroad.
Much could depend on the outcome of a complex power struggle on the Palestinian side. For months, Abbas has been stymied by the more radical Hamas-led government under Prime Minister Haniyeh, some of whose more militant members owe allegiance to Khaled Meshal, the Damascus-based Hamas leader abroad, who also controls most of the Hamas militias. Israeli leaders believe the escalation in violence is part of an effort by Meshal to embarrass Abbas and Haniyeh and to show who really rules Gaza.
By arresting Hamas government ministers and legislators, Israel was trying to stack the internal Palestinian deck in Abbas' favor. It was also sending a clear message to Meshal: That Israel will not tolerate a bogus distinction between political and military echelons, and that if Meshal and his allies continue to promote terror, Hamas could lose its hold on power.
Meshal faces a difficult choice: seeking a compromise with Israel and very probably losing face or escalating the violence and risking even harsher Israeli measures against Hamas and becoming a target for assassination.
In describing the Israeli military operation, Defense Minister Amir Peretz called it "one of the most significant moments in setting the rules of the game between Israel and Palestinian terror." One of the main objectives of Summer Rains was to signal the Palestinians that the rules have changed and that Israel will not hesitate to use overwhelming force if terror from Gaza continues.
Now it remains to be seen whether the Palestinians accept the Israeli rules as a basis for more peaceful co-existence or whether they try to find new ways to create a power balance in their favor.