I was about to post something on the folly of Israel accepting a cease fire now, when I came across this admirable post from Perry de Havilland at Samizdata which makes almost exactly the case I was going to make:

If Israel really does accept and implement a ceasefire on Monday, it will have accepted the worst of all possible worlds. If it agrees to an end to the fighting which does not disarm Hezbollah, or even push it behind the Litani River, and does not get a third party force capable of fighting Hezbollah into Southern Lebanon, it would be fair to say Israel has achieved none of its war aims whatsoever. In short, Hezbollah will have won and we will soon be seeing celebrations in the streets across the Islamic world to that effect.

The primary Israeli method of attack, a series of destructive operational level1 air strikes against Lebanon's infrastructure, only made sense if it was intended to isolate the enemy and dislocate its logistics as an adjunct to a massive and robust attack on the ground with a significant portion of its formidable army, with the intention at crushing Hezbollah as military force.

Otherwise, what was the point of the non-tactical strikes? As Hezbollah already had large numbers of artillery rockets deployed as organic supply with its front line units (demonstrably so), the air interdiction only made sense if Israel was planning an extended campaign for as long as it took to destroy Hezbollah, which means preventing Hezbollah's resupply. Why else blow power-stations, fuel depots, bridges, roads and runways deep into the country rather than just strike tactical targets where Hezbollah is deployed? Bringing the Lebanese transportation system to a standstill was surely done to stop movement of supply so that as Hezbollah formations expended their munitions (a process that would increase as more units were engaged directly by the Israeli army), they would quickly become much less effective due to logistic dislocation. This is 'Air Interdiction 101', the sort of thing military planners have understood since 'Operation Strangle' in Italy in 1944.

But what Israel has done so far is a robust air offensive in support of little more than a series of limited objective raids with only a small fraction of the army. This has not only failed (unsurprisingly) to destroy Hezbollah, it has failed to even displace them far enough back onto Lebanon to prevent them firing rockets into Haifa on an almost daily basis throughout this campaign.

And now, having killed a great many people but still leaving a large number of Hezbollah fighters very much alive and still in possession of both their Katyushas and the positions from which to fire them, the Israeli government plans to stop? Having weathered what Israel threw at them (but not what the Israelis inexplicably failed to throw at them), Hezbollah can, quite justifiably, claim victory and greatly enhance their stature simply by virtue of Israel failed to gain any of its publicly stated war aim.

Can anyone tell me what the hell the Israeli government is thinking?

To which I can only add: precisely. A cease fire would be a disaster. This is, as Bibi Netanyahu has been pointing out, the most important war in Israel's history. It must finish the job.

UPDATE: A correspondent puts a very different view to me:

I think you are wrong about the ceasefire. Despite the BBC taking it the same way ("massive defeat for Israel") I disagree completely. Hezbollah have agreed (if they agree to the ceasefire) to have their militia removed from the south of Lebanon AND return the two hostages. Precisely Israels initial casus belli, and something Hezbollah refused utterly to do in the first place - remember their initial demand that the two hostages would only be returned in a prisoner swap of some kind.

It's a massive Hezbollah climb down and should be highlighted as such. Israel has 30k troops in south Lebanon and I don't think they'll be pulling out until Hezbollah has demonstrated their commitment to the ceasefire by returning the hostages or transferring them to a third party.

Can't really understand the "bad for Israel" point of view.

That's an entirely valid interpretation. But it hinges on the fact of Hezbollah disappearing from the south of Lebanon. I find it difficult to imagine this happening at all, but even if I am wrong and Hezbollah do, initially, leave, my worry is that, within a short space of time, they will be back. As for the idea that an international/UN force will prevent that: yeah, right.