When a nation is attacked by enemy forces, it is allowed to fight back. It may embargo shipments of food and gasoline to the enemy as the English did in WWII. Israel has every right to stop shipping water and electricity to Gaza even if it affects Arab civilians. They can either stop attacking Israeli civilians or move to Arab lands until the war is over.
Man shot dead in northern Israel town of Bi'ina, police say the murder was gang related (Haaretz)
from the article: U.S. lauds Israeli restraint in face of Qassam rocket attacks