Israel should have said they are ending occupation of Gaza and the West bank, releasing the 7000+ Palestinians held without charges in Israeli detention, announced an end to apartheid, the tearing down of all the barricades separating Palestinians from the rest of Israel, and rights of full citizenship to all the legal residents of Israel. Finally, they would have announced a South African style "truth and reconciliation committee" to help the different sides work our their grievances as best as possible.

That would have been the best long term response. It would definitely not be easy at first, but it would also be the single best way to discourage future attacks and hostage taking, as well as disempower the violent factions in Hamas.

You're welcome.