What should Israel do?

Nothing is probably the best answer.
However, pick your platitude
  • Politics does not tolerate a vacuum
  • Politics does not tolerate quiet
The world is clamoring for a solution.
Not exactly the world, but a collection of activists that includes
  • Palestinians leading the chants
  • Jews who feel uncomfortable with comfort
  • Politicians in the US and Europe who feel themselves dependent on Muslims and left of center groupies
  • International activists who can count votes in the UN General Assembly and the UN Human Rights Council, where representatives of Algeria, Congo, China, Cuba, Kuwait, Pakistan, and Saudi Arabia feel that they must reform or liquidate  Israel 
  • Otherwise decent people who are suspicious of Jews
  • Less than decent people who hate Jews, or see Jews as the source of all evil
The Palestinians' current campaign is to demand the removal of 600,000 Israeli "settlers"  within two years from what they see as Palestine.
After the experience of withdrawing from Gaza, one can doubt that any imaginable Israeli government would agree to withdraw a settlement as large as 600 residents.
Among the possibilities is the withdrawal of settlements in the range of 60 residents, but in response to ongoing Israeli judicial actions having to do with them built on land actually owned by Palestinian individuals, rather than the demands of Palestinians in any international arena.
Ban-Ki Moon is still concerned about Israel's attacks on UN facilities in Gaza, but his charge for inquiry also includes UN personnel who allowed Hamas to use UN facilities for storing and firing their weapons against Israeli civilians.
Israeli politicians are among those demanding to do something.
Concrete proposals that might attract a positive response from Palestinians are so far absent from our discussions.
Among the loudest voices, occasionally threatening to leave Bibi's government if nothing is done with respect to finding a two-state solution, come from Tsipi Livni (the government's point person in the recent peace process) and Yair Lapid.
Recent polls suggest that Tsipi Livni's party, immodestly named The Movement led by Tsipi Livni, might not get enough votes in the next election to have any representatives in the Knesset, and that Lapid's party, only slightly less immodestly named There is a Future, would be reduced to half or less of its present Knesset delegation.
The new player in Israeli politics is Moshe Kahlon, who made a name for himself by reducing the costs of cell phone service while Minister of Communications. 
You guessed it. The theme of his yet to be created political party will be the cost of living.
Critics are urging caution. His iconic claim to have reduced the costs of phone calls was actually something he adopted from the Finance Ministry, and he was not a fighter for low costs or good service with respect to cable companies, which were also part of his responsibilities as Communications Minister. Moreover, Kahlon's record in foreign policy (i.e., Palestinians) is murky, and somewhere to the right of center.  
In any case, there is no election scheduled. And despite the threats, betting is that a majority of Knesset Members will hold on to  shaky seats rather than risk their status with the voters.
But what about the Palestinians?
They are alongside us and among us. My evening walk around French Hill produced a picture of two young shepherds feeding their sheep. The older boy just looked at me when I asked if he understood Hebrew. His younger friend indicated that he understood a bit, and responded with a thumbs up to my comment about the four legged visitors to our neighborhood. 
More typical of the Arabs/Palestinians I encounter are fellow academicians, or persons in business or medicine.
But what about the United States, namely Barack Obama and John Kerry? 
Can Bibi continue to ignore them with respect to Palestine, while he campaigns against them on Iran?
It helps Bibi when Kerry links the lack of a two-state solution to the problem of ISIS. 
Even the Knesset leader of Meretz came close to signing on to the ridicule, while she asserted the need to make yet another effort with the Palestinians.
We know the Arabs have been speaking otherworldly hyperbole since the 1930s, usually threatening what they are unable to do. Perhaps we should worry that senior Americans are now speaking their language.
In the past couple of days Hamas spokesmen from Gaza have boasted of rebuilding the attack tunnels, and a Jerusalem Arab with a Hamas connection made a suicide attack on the light rail that succeeded in killing a 3 month old baby and injuring several others. Hamas claimed credit for the attack, and youth gangs of Isaweea and several other neighborhoods celebrated with actions that produced volleys of police tear gas and stun grenades that kept us awake late into the night.
The little girl was one of us with US as well as Israeli citizenship, which entitled her killing to a special condemnation from the US State Department.
One doubts that reconstructed tunnels and Hamas' hand in an incipient intifada will add to Israel's enthusiasm for a generous supply of cement and other construction materials to Gaza. Once the winter rains begin seriously, we can anticipate an international campaign directed at Israel's complicity in the misery of Gazan civilians.
A high profile attack on the Canadian Parliament and other sites, seemingly by Canadian Muslims claiming an association with ISIS, may add to a western coalition, or simply produce statements that the problem is individuals and not Islam. 
Bibi is a young 65, seems in control of restive colleagues, and is leading in the polls for another term as Prime Minister.
One of the old rules of American politics is that politics stops at the water's edge. That seemed to mean that Americans should be united in warfare and other overseas actions, and that foreigners should not meddle in Americans' decisions.
One doubts if that was ever the reality, and it's certainly not the case in the era of Sheldon Adelson and other's like him.
Guesses from here is that it is too late for Bibi to take military action against Iran. Yet he may be able to delay or alter whatever emerges from Barack Obama's passion to reach an agreement with Iran. Against Bibi will be not only the prestige of the White House, but corporate pressures from across North America and Europe to get on with business.