The continually festering conflict between Israel and the Palestinians continues to define overall tensions in the middle east - and the world in general. It is deeper and more far-reaching than conflagrations in Iraq.
The Palestinians have lived for so long with war, stress, poverty and utter hopelessness that they have no incentive to do anything but vote for Hamas, which will avowedly fight Israel and reduce global support for them. Their missiles are borne simply of desparation and futility; their situation is thus entrenched in a vicious circle.
Israel suffers from a parliamentary system that relies too much on coalitions containing toxic elements; at the very least, appeasing those elements leads to hawkish action and insufficient rollback of Jewish settlements in Palestinian territory. Their current blitzkreig of Gaza is due to an exquisite confluence of timing: Obama has not yet been inaugerated, and an election is coming up in Israel. Globally, governments know that stoking the fires of divisiveness and security threats is an election-winner. [Israeli historian Tom Segev roots Israeli action to the long-time but fundamentally flawed Zionist assumption that punitive action - military or clampdown - against Palestinians would or could 'teach them a lesson'.]
As Israel's bankroller, the US has traditionally been a weak, junior partner. Come election time, there is a strong enough margin of Jewish voters to stop any US government from dictating terms to Israel. It is hard to see Obama's watch making any difference, particularly with Hillary Clinton as Secretary of State. Obama is a man of measure, but there is no indication his team will remove all Jewish settlements and force full Palestinian statehood. That is the minimum necessary to ease conflict. It will cost, in aid to Palestine, but that is small bikkies compared to current costs. It will cost, in terms of some continued conflict, but is hard to see that that conflict would be worse than it is now, or couldn't be contained.
It's still possible that Obama could bring about change in the middle east; unfortunately, his words have not flagged decisive action. (see here for his exact words. At the tail-end of a list of foreign policy priorities: "And seeing if we can build on some of the progress, at least in conversation, that's been made around the Israeli-Palestinian conflict will be a priority".) Nevertheless, in carrying out this action just ahead of inaugeration, Israel clearly sees Obama as less sympathetic.
To stop Israel, the US must threaten their supply of aid. To reduce Palestinian attacks on Israel, they need to be given sufficient incentive to opt for a better way. And that requires substantially addressing their poverty and lack of sovereignty.