Three days into Operation Cast Lead, Israel is proposing a diplomatic exit. A ground operation likely looms in an effort to increase the pressure on Hamas. At the same time, however, others argue that the air force is close to exhausting its target bank, so if Hamas can be brought to accept a cease-fire on terms convenient to Israel in the near future it would be better to do so.

Hamas intensified its rocket and mortar fire at Israel Monday. It is starting to recover from the initial shock of the assault, and the bad weather is helping to protect its launching crews from Israeli aircraft.

By 8 P.M., Hamas had fired more than 80 rockets and mortars at Israel, including a Grad Katyusha strike on Ashkelon that killed an Israeli construction worker and wounded 10 others. At 9:30 P.M., a Katyusha hit Ashdod, seriously wounding another two civilians . The Home Front Command says some of the civilian casualties of the last few days could have been prevented had people obeyed its orders and entered shelters when they heard the warning sirens.

Israel has thus far refused to officially discuss a cease-fire, but in practice it is conducting an indirect and hesitant dialogue with Hamas. As of yet, however, there is no official mediator.

Khaled Meshal, the Damascus-based head of Hamas' political bureau, has been calling for a cease-fire for two days now. However, communications with the organization's leadership in Gaza are hampered because all its leaders have gone underground for fear of Israeli assassination attempts, while Israel's air strikes have disrupted the Strip's communications networks. Paradoxically, the same measures that have hampered Hamas' military response are also impeding efforts to end the fighting.

Israel will insist that any truce include a complete, long-term halt to the rocket fire from Gaza. In exchange, it will apparently agree to reopen the border crossings at some point, though no final decisions have been made. Some ministers want to continue the military operation, but Defense Minister Ehud Barak and the chief of staff of the Israel Defense Forces, Gabi Ashkenazi, are more cautious.

The diplomatic clock is ticking relatively slowly because both Europe and the United States are all but closed for Christmas and New Year's Day. Meshal has been trying to get the Arab League and Senegal, which holds the rotating chairmanship of the Organization of the Islamic Conference, to push for a cease-fire. So far, international criticism of Israel has been relatively muted despite the many Palestinian casualties. Even in the Arab world, not everyone is crying over Hamas' losses.

The operation's goals, as defined by the cabinet, are "creating a different long-term security situation in the south, while bolstering Israel's deterrence." The IDF does not interpret this to mean a complete end to the rocket fire, as it considers this impossible. Rather, its goal is to eliminate Hamas' desire to attack Israel. The bombing campaign has so far dealt a severe blow to Hamas.

However, ground forces are already in place for the next phase. The Gazan mud will make it harder for tanks and armored personnel carriers to maneuver, and Hamas has clearly been preparing its defense for months. Thus any ground operation will entail many casualties, which is one of the government's considerations in deciding how the operation should proceed.

On July 12, 2006, hours after the Second Lebanon War began, Barak called Prime Minister Ehud Olmert and warned: "It's very important to define how and when you'll end [the war], because the more time goes by, the greater the potential for complications." That is no less true today.

As for the Palestinians, they plan to declare victory regardless of what happens. If the IDF withdraws rapidly, without a ground operation and without having seriously reduced the rocket fire, Hamas will boast that it survived and Israel blinked first.

But Hamas officials and analysts said Monday that the organization would actually like Israel to launch a ground operation; it hopes this would let it inflict such heavy losses on Israeli tanks and infantry that Israel would flee with its tail between its legs.

Just as the Second Lebanon War did, the current war will have far-reaching consequences for the balance of forces in the Middle East. First, it has brought the conflict between Hamas and Egypt into the open, which could influence domestic developments in Egypt. To some degree, it has also reignited the conflict between Arab moderates, led by Egypt and Saudi Arabia, and the extremists, led by non-Arab Iran. In Lebanon, it is already clear which side won. In Gaza, we will learn the answer in the coming days or weeks.