A seven-minute ride from Talansky, a minute's walk from Obama, the murderous tractor driver who launched his attack on Tuesday afternoon in central Jerusalem provided a reminder from real life. The Israeli-Palestinian conflict is not going anywhere in the near future. The day after the terrorist attack, the newspapers gave prominence to what was said by Yuval Diskin, the head of the Shin Bet security service, at a briefing he gave to the Knesset's Foreign Affairs and Defense Committee some two hours before the bulldozer attack. Diskin's forecast about there being copycats of the first "tractor terrorist," like his fierce criticism of the lack of law-enforcement and deterrence in East Jerusalem, were viewed as a prophecy that fulfilled itself at lightning speed. The small but well-oiled media section of the Shin Bet succeeded in presenting its performance, which at the bottom line was a failure to prevent a terror attack, as a near success.

Unlike his predecessor, Avi Dichter, Diskin appears very sparingly at meetings or forums in which his remarks can reach the general public. His remarks to the Knesset members therefore present a rare opportunity to understand the head of the service's worldview. And the world according to Diskin is far from a friendly one: Fatah is weak, Hamas is gaining strength, Israel's deterrent powers are at a low ebb. More than a month after the declaration of the cease-fire in the Gaza Strip, Diskin admits that the tahadiyeh is stable. All those involved have an interest in its continuing, he says, and Hamas' influence on the other factions in the Strip is very great. Hamas sought the lull mainly because it was under pressure on account of the distress of the Palestinian public.

The sanctions that Israel imposed on the delivery of gasoline were a salient example. The residents of Gaza stopped driving their cars and the fact that it was only Hamas men who had enough gas to enable them to continue driving around, for the first time made them look corrupt. As an ideological and social movement, Hamas is considered to be in critical need of public support. It is also interested now in consolidating its power base in the Strip and in increasing its military strength. It has no interest in an immediate military confrontation with Israel at this point.

In agreeing to the cease-fire, Diskin believes, Israel extended a lifeline to Hamas. "We are not attacking them and we have lifted the blockade, while they have not taken upon themselves a commitment to stop their arms buildup. From the point of view of Hamas, it is the winner in the conflict, as the side that managed to hold its ground during the Israeli blockade. The lull in fighting is depicted as an impressive achievement for it." For its part, Israel is getting a temporary calm but, he says, "this is in fact an illusion. In our assessment, the rocket firing will start again at some point in the future."

In general, Diskin says, "our situation is extremely problematic in the struggle against radical Islam." He mentions a series of events in the past three years: the withdrawal from the Gaza Strip, Hamas' gaining of control of the government in Gaza, the Second Lebanon War, and now the cease-fire. "The events of the past three years have been a real blow to Israel's deterrent ability. Since Hamas came to power, the level of Palestinian daring against us has risen. That is the result of the erosion of our status."

Let us assume, Diskin continues, that Israel manages to arrive at an agreement with Palestinian President Mahmoud Abbas (Abu Mazen). We will have to make progress with the peace process while we have one leg stuck in the Gaza Strip and the other in the West Bank. The PA will not fight against Hamas. Hamas is stronger than Fatah, and if a joint "government of experts" is set up, its status will increase even more. Had Israel not arrested, after Gilad Shalit was kidnapped, Hamas' parliament members and ministers in the West Bank, Fatah would no longer be in charge of the PA in the West Bank.

Hamas has no intention of becoming more flexible about long-term issues vis-a-vis Israel, the Shin Bet head believes. Any flexibility it shows will be tactical. "For them the entire area of the Land of Israel is waqf [holy Muslim] land. In the future, they want to set up an Islamic caliphate here. From their point of view, it is a zero-sum game - them or us. A religious movement doesn't change its ideology."

Diskin expresses support for a deal for the release of Shalit, but not at any price. "We have to get Gilad Shalit back but not at the cost of killing dozens of innocent people. I am in favor of a deal, but a sane deal." After any agreement, Israel will have to reexamine very thoroughly the rules by which it exchanges prisoners of war. He opposes freeing "Young" Fatah leader Marwan Barghouti from prison, "but if the government decides to release him, it is best that this be done as a gesture to Abu Mazen rather than as part of a deal with Hamas." Unlike others, the Shin Bet head does not predict a great future for Barghouti outside the prison walls. "After the euphoria and the celebration [among Palestinians] over his release, we do not believe that Barghouti will play a crucial role in the arena."

In view of the great difficulty of fighting terror born and bred in East Jerusalem, it is not just the Shin Bet head who supports the idea of destroying terrorists' homes. The prime minister and defense minister are also in favor. It sounds simpler and more convincing than the alternatives - increasing the surveillance of a population of some 200,000, carrying out security checks of (for example) hundreds of Palestinian bulldozer drivers, and restricting freedom of movement among East Jerusalem residents bearing blue Israeli identity cards.

Major general Miki Levy, the (successful) commander of the Jerusalem District police when the terrorist bombings of the second intifada were at their height, explained this week that it was the razing of houses that saved Jerusalem. In 2002, he said in an interview with Army Radio, we proposed destroying the homes of members of the so-called Silwan unit of Hamas, which was responsible for the murder of dozens of Israelis. The political echelons wavered, but finally they accepted the point of view of the police and the Shin Bet. "Since then, we have had six years of quiet, until now."

The facts are somewhat different. In the year and a half following the destruction of the homes of the Silwan terrorists, in January 2003, there were another seven suicide bombings in Jerusalem, in which 75 Israelis were killed. Only then was a relative calm established, which held for three and a half years. Terror attacks in Jerusalem were halted thanks to the tremendous efforts made by the Shin Bet and the Israel Defense Forces, which managed to almost totally uproot the murderous terror networks of Hamas and the Islamic Jihad in Hebron, Bethlehem and Ramallah. It is these networks that sent most of the suicide bombers to Jerusalem, where they were assisted by local Arabs, who let them sleep over there and then transported them to the scene of the crime. They were brought under control only as a result of innumerable nighttime arrests and long hours of interrogation by the Shin Bet. The establishment of the separation fence, which made it more difficult (in some parts) to reach Jerusalem from the West Bank played a part too.

In the present round, the East Jerusalemites are the spearhead, the executors themselves. It is not at all clear that there was an organization behind the past six month's three suicide attacks in central Jerusalem. All the same, the closeness of the past three attacks now begins to seem like more than a mere statistical coincidence. One of the directions that will have to be checked is whether the three terrorists - the attacker at the Mercaz Harav yeshiva and the two bulldozer drivers - knew one another.Ibrahim Hamad, the head of the Silwan unit and the commander of the armed wing of Hamas in Ramallah who was arrested at the beginning of 2006, was a great believer in sleeper cells. Who knows what he left behind him when he was arrested?

Will destroying terrorists' homes again increase Israel's deterrent powers, if only in East Jerusalem? It is difficult to prove that empirically. Shin Bet and army officers who are asked for their opinion on this controversial issue always point to events that occurred some years ago, when Palestinian fathers reported their sons' intentions to the authorities for fear that the army would destroy the family's home as a punishment for the son's suicide bombing. But here too there are no more than 20 documented cases, and the question is always raised whether the destruction of a house is not the opening shot for the career of yet another terrorist.

Major General Udi Shani, who headed the committee that at the beginning of 2005 recommended to then chief of staff Moshe Ya'alon ceasing the practice of destroying the homes of terrorists, enlisted the help of writers and academic experts in preparing his report. The Shani committee stated that the damage caused by knocking down houses was greater than the value yielded by the practice, and that it had not been proven that it indeed deterred terrorists. So long as the trend is that terror is being thwarted, Shani said at that time, it is better to avoid destroying houses. If we find that we are in the midst of a new wave of suicide bombings, it is always possible to reconsider.

Ya'alon accepted the conclusions, even if they did not please him. Diskin thinks differently, but he has not yet produced decisive arguments in support of his stand.

Lebanon, too, is now a central concern for the top security echelons. There are officers in the General Staff who recommend putting an end to restraint and sending "military signals" to the adversary, especially against the backdrop of reports in the Arab media about Hebollah setting up advanced anti-aircraft batteries in the Lebanese mountains. The head of Military Intelligence, Major General Amos Yadlin, said at the cabinet meeting this week that, with the completion of the prisoner-swap deal, Hezbollah could be expected to try and carry out an attack along the northern border as early as this summer. Yadlin explained that from the organization's point of view, there are still some "open files" that could constitute a pretext for an attack: the assassination last February of its leader, Imad Mughniyeh, and the fate of the Shaba Farms and the village of Maghar. In the last General Staff exercise, which took place in May, as at the meetings of the General Staff, there were profound professional arguments - does Israel have a large enough order of battle, in case of need, to conduct an attack on two fronts, the Syrian and the Lebanese? To what depth would a maneuvering force have to penetrate in order to achieve a decisive win over the enemy? Does the IDF have sufficient firepower at its disposal in view of the missions it might have to face in the North? (Major General Moshe Ivri-Sukenik, who was head of the Northern Corps until the beginning of the year, believed that the answer was negative, and expressed vehement criticism of the situation). Following the war in Lebanon, the accepted wisdom among IDF officers and academic experts was that one of the worst mistakes in that conflict was the decision to hold back the entry of ground forces into Lebanon and the presumption that it was possible to solve the problem of the Katyushas by more and more aerial bombing. Chief of Staff Gabi Ashkenazi hints that with him, things would be handled completely differently. And indeed, analysts believe that Ashkenazi, unlike his predecessor, Dan Halutz, has a thorough understanding of ground warfare and therefore would not hesitate to send forces deep into the field. However, when the question of what should have been is addressed to a number of senior officers, one hears contradictory responses. Some speak about flanking and encircling South Lebanon (in the spirit of the plan proposed by cabinet minister Shaul Mofaz toward the end of the war, a plan that the government refrained from approving). Others believe that there is no way to avoid a systematic hunt, house after house, and cell after cell. And there are some who return to the air force option, even though this approach failed in the war.

One senior officer says that it is clear that in the next round, ground forces will be employed "so as to take a maximum number of civilians out of the range of the Katyushas," but that such a move would not be the way to win the battle. "We must not discount the short-range rockets but we must also not exaggerate. A great deal depends on how well we know how to protect ourselves and on responsible behavior on the home front. In the end, the real result will depend on something else - on our ability to deter the other side and to create destruction there on a scope that will force them to stop." Another senior officer, from the field corps, touches on a sensitive spot: "It is easy to say that next time we'll send in the ground forces," he says. "What is not mentioned is the price. A government that decides on a move like that has to know that it will entail the loss of many soldiers' lives. Even after what we experienced in Lebanon, I can't see a government in Israel today making a decision of that kind without hesitating over the matter for a few days."