There will not be peace in the Middle East in my lifetime. And probably not in yours either. There are so many reasons for this that it really doesn't make any sense to analyze them. It's "whack-a-mole." You bang one of the reasons on the head and push it back into its hole, and another one pops right up. None of the principals involved in the region - not one of them - is reasonable. So, there's no understanding their reasons and there's no reasoning with them.
I can make some observations though about the most recent round of carnage. Why not? Everyone else is.
1. There's a difference, or at least there ought to be, between soldiers and civilians. If, during a raid in an area where hostilities exist, soldiers are captured, kidnapped, whatever you want to call it, that's a shame, but it's part of their job. Being a soldier in an area of hostilities puts you at risk. When you signed up, or were drafted and didn't resist, you signed up to take that risk. That doesn't mean that your government, in this case Israel, shouldn't try to protect or defend you, or respond to the provocation in a manner that might prevent the same thing from happening again. But it does mean that your status as a soldier, and the inherent risk in that, must be part of the equation in figuring out what the response should be. In any event, the response must be measured so as to avoid making the situation worse.
2. Israel's response is making the situation worse. This is in part due to internal Israeli politics, which is a terrible reason to go to war. The Olmert government does not have a military track record to call its own. Unlike the Sharon government, which responded to nearly identical provocations in a far more measured fashion - because with Sharon's reputation it had nothing to prove - the current Israeli government feels the need to show how tough it can be. Hundreds, possibly thousands by the time the smoke clears, of civilians are paying the price for the Olmert government to make itself look manly.
It seems to me that if you're killing non-combatants over combatants at a ratio greater than 10 to 1 - which is what Israel is currently doing - I don't care what the rationale is, you're undermining the legitimacy of those actions.
3. Israel's response is also destroying any progress that had been made toward a more stable Lebanon, something that Israel was benefitting from and would have benefitted further from in the future. Hezbollah was launching its attacks on Israel from a small area near the border, a long way from Beirut. Yet Israel has attacked Beirut, stopping its recovery in its tracks, destabilizing and undermining the weak, but strengthening, Lebanese government and wrecking the fast recovering Lebanese economy.
So now, rather than an increasingly prosperous, politically stabilizing Lebanon on its border, Israel is going to have a basket case for a neighbor. Since Hezbollah is apparently better organized, and possibly even better funded, than the actual Lebanese government, who do you think is going to benefit most from all this chaos?
On the one hand I can understand what has long made Israel so touchy. It's a tiny little nation, surrounded on three sides by people who for the most part hate it, and a strong defence is seen as a matter of life and death. So, with its back against the wall, Israel needs to be as strong as it can militarily. But as a long term survival strategy, that isn't nearly enough. Sooner or later someone who hates it is going to find new, more devastating ways to attack it. Sooner or later its few allies, for their own internal reasons, might abandon it. Masada was seen as nearly impregnable. It was as strong a defensive position as the Jews ever held. That didn't end so well.
Israel also needs to be as strong diplomatically as it possibly can. And first and foremost that means trying to make friends and partners with its neighbors. And to do that, the neighbors need to be at peace within their own borders, their governments need to be stable and their economies need to be at least providing hope for their people. Trade, economic ties, cultural exchanges, cooperation on all fronts is the only long term defensive strategy that is really going to protect Israel. The current ruckus is hurting, rather than helping that effort.
And One More Thing - The Free Market Solution to the Problem of Jerusalem
Jerusalem is one of the world's major bones of contention. Take it out of contention. Take it away from all those snarling brutes. Declare it an international open city. Move the U.N., the World Court, the WTO, all the international groups there. Contract out the running of all the religious sites to Disney. Let them build "Religion World." Use the proceeds to help fund the international groups there and to give good paying, secure employment to the religious nuts who will provide the local color in the same way that employees in Donald Duck and Mickey and Minnie Mouse suits do at other Disney theme parks.