Iran, and it's new allies, the Palestinian Hamas organization, need a victory. A real victory, not one of those "I fought Israel and I'm still alive, therefore I won" victories that have long been popular with the long list of losers who have gone to war with the Israelis. Iran's client, Hezbollah, went to war with Israel in 2006, and declared victory largely on the basis that Hezbollah still had someone to pick up the phone after the shooting stopped. Much of southern Lebanon was blown up, and Israel has been preparing for a rematch. One in which the Israelis will be after the destruction of Hezbollah.
About a year ago, Israel went after Hamas, to put an end to rocket and mortar attacks on southern Israel, and growing attempts to kidnap Israelis. The main goal was to cripple Hamas combat power, and cut the smuggling routes (the tunnels under the Egyptian border). Hamas suffered heavy losses, with dozens of buildings and compounds (used for barracks, weapons storage, bomb building and headquarters) destroyed. About 70 percent of the Palestinians killed were Hamas employees, including 350 who came out to fight the Israeli infantry. The failure of Hamas fighters to show up for the ground war was a big loss of face for the terrorists. Hamas has a widely publicized primary goal of killing Jews and destroying Israel, and their performance in the 22 day war made it clear that this terrorists organization was terrified of their victims. Only 13 Israelis were killed in the entire campaign, four of them to friendly fire. Losing a hundred people for each of the enemy killed is not making Hamas any more popular in Gaza. Hamas seemed to sense this, and sent death squads around to kill or wound Fatah supporters they thought might try to take advantage of the chaos. Now has now called in Iranian advisors, to help install a religious police state in Gaza, similar to the one that has run Iran for over two decades. This includes lifestyle police, control of the media and economy, and a determination to hold on to power indefinitely.
Nevertheless, Hamas declared victory. It's traditional in the Arab world that, if you fight Israel and still have possession of your capital at the end of hostilities, you can declare that the Arabs won. No matter how many battles you lost, if you can still issue a press release declaring victory after the shooting stops, it counts as a win (apparently because the Israelis had the ability to utterly crush you, but were stopped by steely Arab resolve). This particular charade is growing threadbare with over-use, and this time around, even many Arabs are openly disappointed with the Hamas "victory" (or "lack of utter destruction.")
The Israelis did not go into the cities, where Hamas fighters would have had the biggest advantage. But this, and the extensive use of smart bombs only against Hamas targets, also greatly limited civilian casualties (about 400 dead and 1,500 wounded among a population of 1.5 million). In those cities, Palestinians openly expressed their anger at Hamas. To most Palestinians, Hamas brought the war on by constantly violating the June-December cease fire by firing rockets into Israel. Now more Palestinians see Hamas as terrorists who don't much care for the people they say they are supporting. Since Hamas took over two years ago, life has gotten worse for the residents of Gaza, and Hamas doesn't seem to care. Now it's obvious that Hamas can't even defend itself.
Israel believes that, unless there are better security measures installed on the Egyptian border, Hamas will build more tunnels and continue smuggling in long range rocket components. That's what has happened, even though the Egyptians are trying to crack down on the smuggling tunnels. But the corruption is so pervasive on their side of the border, that it's been impossible to shut down all the tunnels, only those that paid the smallest bribes. Recently, Hamas test fired one of the long range Iranian missiles they smuggled in (broken down into components small enough to get through the tunnels). They fired the missile into the Mediterranean, but the Israelis got the message. Now Israeli cities are in danger of rocket attack from Gaza.
There's only a ceasefire in place at the moment. The Israelis aren't quitting, they're just halting. And, despite the ceasefire, Palestinians (not Hamas) are still firing rockets, and shooting at Israeli soldiers. Israel has promised to respond if shooting doesn't stop. To make matters worse, the European Union said that they would not contribute reconstruction funds for Gaza, as long as Hamas was running the place. Arab countries pledged billions for reconstruction, but even these Arab countries want to attach strings to the cash, to hinder Hamas from diverting the money to other uses.
Meanwhile, the Palestinians Arab allies got the UN to put together a rather biased report that accused Israel of war crimes for defending itself. Naturally, Hamas got off easy. This makes great propaganda for Hamas, but it's not a victory unless the UN, and especially the Europeans, lay some sanctions on Israel. The dream is for the Europeans to put armed peacekeepers into Gaza, to make the place a terrorist base that is immune from Israeli attack.
While many Europeans talk a tough game about Israeli "aggression" against the Palestinians, they are not eager to fight Israel. There's a lot of bad blood between the Europeans and the Jews, and Israel has nuclear missiles that can reach Europe. These missiles can also reach Iran. The Palestinians aren't worried about getting nuked by Israel, they are more concerned about getting killed or arrested for attacking Israelis. But many Palestinians, and Arabs, are getting tired of this futile effort to obtain a real military victory against Israel. Even many Palestinians are looking for a way out. That's more difficult because Palestinians are split between pro and anti-Hamas factions. Only about a fifth of Palestinians back Hamas, but Hamas has more guns and determination than the majority of Palestinians. Hamas is also into Islamic radicalism, a movement that tends to declare any war they survive as a victory. The Palestinians want to avoid any more of those victories. But unless Hamas can be restrained, there's more violence, and false victories, in everyone's future.