Hezbollah initiated a course of violence for two reasons: 1) it wanted something and 2) it thought it could accomplish something violence. They wouldn't launch an attack for no reason. They also wouldn't launch an attack that would be doomed to complete failure.

Marc MacYoung, from No Nonsense Self Defense, describes the concept of a "Secondary Victory." He was speaking of the sort of "victory" achieved by a violent criminal or an inmate in a correctional setting. The perpetrator doesn't beat the police officers in the sense that he "wins" or gets away. But by making cops sweat and work for it he gains esteem among his peers - other criminals or inmates. If you think about it, this makes a lot of sense. There's no way that a prison inmate will ever beat up all the guards - they have him outnumbered and have better weapons. But if it takes six men with pepper spray, clubs and stun guns to drag him out of his cell think about how tough that guy is!

Hezbollah has scored the same sort of "victory" here. They haven't achieved a true victory: IDF troops stopped of their own accord. They were not bloodily repulsed or routed in a conventional sense - all engaged IDF units remain combat effective and are ready to resume operations at any time.

However, it's undeniable that Hezbollah has achieved a secondary victory. Their power and prestige on the Arab Street, among Arab governments, in Lebannon, in Europe, in the UN and in Syria and Iran couldn't be higher right now. That makes them immensely difficult to deal with.

If you want to prevent a group like Hezbollah from getting violent, you have to set things up so that they cannot get what they want through violence, cannot achieve a secondary victory, and offer them something that they do want through another means (namely, compliance with your demands).

Israel is only moderately successful at the first part. Hezbollah has a very difficult time achieving much in the way of violence against Israel proper. Rockets and mortars usually miss. Raids and sniping are hard work (and dangerous!). The border is pretty well guarded. A true success would be a heavily patrolled border, backed up by human intelligence work in Lebannon. The IDF should have stopped Hezbollah's raid before it even started by being alert, well trained and fully prepared for battle. Hezbollah wouldn't have dared launch it if they'd known it would fail.

Israel has NOT been successful at the second part. By reacting with a lot of force in a big, conventional operation they already show some weakness. But having that operation fail is utterly unacceptable. Israel has to go a long way towards developing the kind of human intelligence contacts and surveillance operations that would have enabled it to defeat Hezbollah quickly and clearly. A willingness on the part of the IDF/the Isreali government/Israeli society to accept higher military casualties would be a good start - it opens up rougher operations.

Israel has not even attempted to offer Hezbollah another way out. Right now there is no negotiation. There are no contacts. If violence is the only means Hezbollah has then they'll use violence, regardless of the cost or the odds.

A proper strategy of deterrance has to hit all three key points: deny the antagonist the ability to achieve victory, make sure the antagonist knows that there's nothing to be had from defeat either (i.e. no secondary victory) and finally offer the antagonist another way to recover something from a bad situation.

Israel needs to seriously step up its intelligence work and enter into negotiations with Hezbollah. Not so much to argue about details, but to offer the leadership of Hezbollah a plausible alternative to fighting. In their place, I'd be more than willing to trade Hezbollah prisoners in whatever numbers for Israeli citizens/soldiers. The IDF can always get more of them, after all. Shebaa farms is another matter. Israel can also offer reparations for damage to civilian infrastructure or offer humanitarian aid. Disarming Hezbollah will probably not happen. Israel is too weak to negotiate that much of a concession. Once Israel establishes its ability to achieve all three steps of deterrance, then they can demand compliance from Hezbollah on rockets or possibly full disarmament.

Note that a beefed up UNIFIL and forward deployed Lebanese army would make it more difficult for Hezbollah to achieve even a secondary victory - too much chance that their initial operation would fail in a humiliating fashion.