The Grad missiles fired from Gaza at Be'er Sheva and Ashdod present Prime Minister Benjamin Netanyahu with the toughest test of his term so far. The prime minister said he would be "strong in the face of Hamas." Now, the time has come to make good.

Until the current crisis, Netanyahu and his supporters said we have no terror. Netanyahu explained, and perhaps even believed, that the enemy is afraid of his "zero tolerance policy" against terror; that his very presence in government, with his record as an expert in the war on terror, had deterred Hamas, Islamic Jihad and the Al Aqsa Brigades from renewing their armed struggle against Israel.

But the murderers of the Fogel family in Itamar, who have yet to be apprehended, probably did not worry about the identity of Israel's prime minister before they launched their nighttime slaughter. The launchers of the rockets and mortars are also not impressed by him. It seems that the perpetrators of Wednesday's bombing in Jerusalem were more interested in security and escape routes than in who was sitting in the nearby Prime Minister's Office.

Netanyahu's response to the murders in Itamar, accusing the Palestinian Authority of incitement and speaking of building hundreds of apartments in settlements, was intended to calm his power base on the right and satisfy the settlers so they would not take revenge. But when it comes to Gaza, Netanyahu is doing the same thing his predecessors did.

However, the diplomatic environment is more complicated than on the eve of Operation Cast Lead. U.S. President Barack Obama will not be enthusiastic over an Israeli operation with numerous casualties, destruction and a besieged Gaza. Egypt is in a period of political transformation, and governments of Arab countries are in danger of collapse, which would make it difficult for them to support a major Israeli campaign against Hamas.

The moral line set by the war in Libya is clear. Attacks from the air are allowed, but no boots on the ground and no occupation. Netanyahu will certainly try not to exceed this pattern in dealing with Gaza.

The Grad missiles serve Netanyahu's policy, which seeks to stop international recognition of a Palestinian state. They are the proof that any area Israel gives up in the West Bank will become "a base for the launching of missiles against Tel Aviv and Jerusalem."

Western leaders will find this difficult to contradict in view of the missile and mortar attacks from Gaza, and will have to pay at least lip service to Israel's security demands in the West Bank.

The political implications of escalation are also complex. Terror strengthens the right and hurts the left. But the right is split now between Netanyahu, who speaks of "resoluteness" alongside "responsibility and wisdom," and Lieberman, who as foreign minister can talk a great deal without responsibility for implementation. Israeli hesitation in the face of continued fire from Gaza will strengthen Lieberman. An effective response against Hamas will help Netanyahu but only if it is short and surprising, the right mixture of military action and diplomacy. Netanyahu's test will be to find this middle way.