@oralloy,
oralloy: "I also note that Mr. Netanyahu was willing to negotiate peace with the Palestinians a year or so ago."
So was Hamas willing to negotiate peace with Israel. But there is a difference between real offers and those made as propaganda ploys. There is also a difference between cease-fire and peace. Finally, there is a difference between peace and the creation of a Palestinian state.
I don't understand why you keep ignoring the fact that the Likud Party charter explicitly rejects the existence of a Palestinian state. I certainly don't ignore Hamas' rejection of the state of Israel in its own charter. It seems abundantly clear that both parties collude to prevent a decisive and lasting solution to the conflict. Hamas' existence depends on unresolved grievances; Likud's political dominance depends on unresolved security concerns.
As long as Israel allows the cooperation or noncooperation of Hamas militants to determine the process outcome, stalemate and endless simmering conflict are inevitable. Only by cutting Hamas out of the loop can progress be made.
Recognize the Palestinian Authority as the representative of the Palestinian people. Create an independent Palestinian state in the West Bank. Use subsidies and trade to create a prosperous economy there and to create affordable housing which lures Palestinian residents of Gaza to immigrate into the new state. With no popular following or resident population to speak of, Hamas will collapse as a political authority. At that time, call a plebiscite to annex Gaza into the new state under the governance of the Palestinian Authority.
Is there something naive or unworkable about this? Palestinians want reparations. Building them nice new housing with subsidized low rents in a thriving economy in their own independent state seems to fit the bill. Its easy to nurse longstanding political grievances when you're living in poverty and political impotence; not so easy when you're living well in your own sovereign nation. Hamas knows this, which is why they help Likud perpetuate the former.