In a Jerusalem Post piece six years ago, Preventing war: Israel's options I called for shutting off utilities to the Palestinian Authority as well as a host of other measures, such as permitting no transportation in the PA of people or goods beyond basic necessities, implementing the death penalty against murderers, and razing villages from which attacks are launched.
Then and now, such responses have two benefits: First, they send a strong deterrent signal “Hit us and we will hit you back much harder” thereby reducing the number of attacks in the short term. Second, they impress Palestinians with the Israeli will to survive, and so bring closer their eventual acceptance of the Jewish state.
As for the inevitable objection that tough measures will generate ill-will toward Israel, the reply is easy: back when the IDF did deploy deterrent tactics, the country enjoyed a much higher standing internationally. Since 1993, its weakness has earned it not just scorn but also heightened hostility.
For now, however, a deterrent policy remains remote, as Prime Minister Olmert is said to oppose the shutting off of utilities as "collective punishment." And so will the Palestinian assaults continue.