The 18-day old Israeli operation in Gaza appears to be on the cusp of intensifying as Israeli troops are preparing to conduct the third phase of the operation and enter the urban sprawl of Gaza City. Intense fighting is expected as Hamas has dug in and planted mines and booby traps along the roads and in buildings. Clearing a city the size of Gaza City may take weeks and will generate more images of the plight of the Palestinian people.

Reports from the region indicate Hamas may indeed be on the ropes. Israeli intelligence believes Hamas's military arm has suffered significant losses. As Michael Goldfarb noted yesterday, Hamas's leadership in Gaza is pushing for a ceasefire, despite calls to continue the fight by Hamas's leadership in Damascus and the Iranians.

Fatah, Hamas's political enemy, has essentially endorsed the Israeli incursion and has held Hamas responsible for Palestinian deaths. And despite reports to the contrary, the vaunted "Arab Street" has been relatively quiet as the Israelis pound Gaza. Most Arab regimes are pleased to watch Israel destroy the Iranian and Syrian-sponsored Hamas.

Despite the current momentum on the Israelis'side, the word from Israel is the leadership troika of Prime Minister Ehud Olmert, Defense Minister Ehud Barak, and Foreign Minister Tzipi Livni may be getting cold feet in taking the fight into the heart of the cities in Gaza to root out Hamas.

Political sources said Israeli Prime Minister Ehud Olmert, Defense Minister Ehud Barak and Foreign Minister Tzipi Livni decided late on Monday against ordering troops in the next two or three days to engage in all-out urban warfare.

Opening a "Phase 3" of the offensive would likely complicate truce efforts, lead to intense street fighting and could cause heavy casualties on both sides, a politically risky move less than a month before Israel's parliamentary election.

Israel clearly has the upper hand in the fight. While the Israelis were clear that their goal wasn't to defeat Hamas, they may actually have the opportunity to do so. Olmert, Livni, and Barak could very well snatch defeat from the jaws of victory by cutting a peace deal with Hamas and leaving the organization intact and in control of Gaza. As Goldfarb said yesterday, the Israelis would be well served to "give war a chance."