By Jonathan Marcus
Diplomatic correspondent, BBC News
A little over a week ago, a rocket fired by Palestinian militants from the Gaza Strip hit a military base at Zikkim in southern Israel. Some 70 soldiers were injured.
But even before this attack there was a growing debate in Israel calling for some kind of military operation to stem the missile and mortar fire from the Gaza Strip.
Qassam rockets are frequently fired from Gaza into southern Israel
Earlier this month, Defence Minister Ehud Barak noted that Israel was "getting closer to the need to carry out a large-scale ground operation" in the Gaza Strip.
Some wondered if the only constraint on a major incursion into Gaza was the continuing tension on the northern front between Israel and Syria.
The Zikkim episode of course was an exception. By and large, the Israeli casualties from these attacks have been light.
But that is as much a matter of luck as anything else and they have, nonetheless, given the Israeli government a major problem.
Daily life in Israel's southern town of Sderot is lived out under the perpetual shadow of the missile fire.
For any government, ensuring the security of its citizens is paramount.
A defensive system that could track and shoot the rockets down in-flight is a major technical challenge given the very short time that they are in the air.
In the absence of a technical solution to the missile attacks, the only options are diplomatic or military.
One possibility might be to explore the Hamas leadership's apparent interest in some kind of ceasefire.
But the Israelis clearly want to do nothing that would give Hamas a breathing space to consolidate its control in Gaza and perhaps prepare for a takeover in the West Bank as well.
The Israeli cabinet decision to declare the Gaza Strip hostile territory is meant as a prelude to tightening the screw.
Dozens of Israeli soldiers were wounded in a recent rocket attack
It talks of steps to reduce the supply of fuel and electricity to the Gaza Strip - most of the former and much of the latter comes via Israel.
But this will only be seen by Palestinians as a form of collective punishment.
It poses fundamental moral dilemmas and actually risks consolidating support for Hamas among a population that is already struggling to maintain a basic economic standard of living.
It is hard to see how the total collapse of Palestinian society in the Gaza Strip can benefit anyone.
For the Israelis, military options, too, are unattractive.
A major incursion of long duration would risk significant Palestinian civilian and Israeli military casualties.
Israel could re-occupy the north-eastern part of the Gaza Strip and push back the rocket launchers, but for how long would it stay?
Some analysts have reluctantly suggested that the preferred option might be a return to the targeted killing of senior Hamas leaders, both political and military.
But this too raises all sorts of issues. Much of the Hamas political leadership, after all, has been elected even though it has been disowned by President Mahmoud Abbas.
Israel has been considering a large-scale incursion into the Gaza Strip
Such a step would inevitably draw strong criticism from abroad, further damaging Israel's diplomatic standing.
Mention of the Fatah leader and Palestinian President Mahmoud Abbas underlines the fundamental dilemma facing Israeli policy-makers.
The split between Hamas in Gaza and Fatah in the West Bank introduces a dangerous level of complexity into their calculations.
Almost anything that they do to bring pressure on the Gaza Strip risks bolstering support for Hamas and potentially weakening President Abbas in the West Bank.
Yet he, after all, is the very man that US and Israeli policy is ostensibly intended to strengthen.