ANALYSIS / Israel Is on Its Way to Reoccupying All of the Gaza Strip

If it pulls out now from Gaza, it will appear to have cut and run at the first sign of trouble in battling Hamas.

The way events played out yesterday did not stir the political leadership into thinking of stopping the ground offensive and moving toward a cease-fire. On the contrary, Israel is moving toward a decision to occupy the whole Gaza Strip.

The message yesterday from Jerusalem was that it is impossible to end Operation Cast Lead without an achievement, and if in the next two days there is no satisfactory diplomatic solution, Israel will have to broaden the operation.

"Broadening the operation" could mean moving from house to house as in Operating Defensive Shield in 2002 in the West Bank, aiming to kill or capture as many Hamas fighters as possible. Or it could mean surrounding Gaza City, similar to the way the Egyptian Third Army was cut off in 1973, or like the siege of Beirut in 1982, until Hamas' leaders emerge from their hideouts with their hands up. This could take several weeks.

Political sources are denying reports of a disagreement at the top over the future of the operation, and insist that Ehud Olmert, Ehud Barak and Tzipi Livni are united in their understanding that under the current circumstances Israel should continue until there are diplomatic gains. Other sources say there are problems. Barak believes that rejecting the French offer for a cease-fire last week was a mistake that made Israel miss a good opportunity to end the operation; now he wants to go on. Olmert, according to some reports, is pushing for a broadening of the offensive. Livni is worried that any international developments may grant Hamas legitimacy.

Israel is in a bind. If it pulls out now from Gaza, it will appear to have cut and run at the first sign of trouble in battling Hamas. And if it goes on to a full occupation of the Strip, it may pay a heavy economic and political price without achieving its political goals.

Israel is trying to put together a complex maneuver based on an international mechanism that will prevent arms smuggling into Gaza. Egypt is expected to back this effort, but the actual work on Egyptian soil will be assigned to U.S. and other foreign forces. The effort will not concentrate solely along the border with Rafah but along the whole chain of smuggling, from Iran to the Philadelphi route that runs along the Egyptian border. All told, Israel will try to persuade the international community that the continued arming of Hamas will undermine the remaining stability in the Middle East.

Egypt is the key to the deal that Olmert and Livni are trying to put together against the arms smuggling. A visit by American officials to Cairo will be a sign of progress. In Israel there is a feeling that Cairo will support the effort, fearing that an occupation of the Strip will result in hundreds of thousands of Palestinian refugees who flee the fighting.

If a deal is reached, the risk for Israel is that its already sensitive relations with Egypt will focus on the effort to block arms smuggling. It's possible to picture a scenario in which a government under Benjamin Netanyahu contains right-wing voices who demand that Israel impose sanctions on Egypt because of intelligence reports that missiles capable of striking Tel Aviv have been smuggled into the Strip.