Chapter 16 examines Israeli foreign policy towards the Middle East in the wake of the 2006 Israel-Hezbollah war. The chapter focuses on the key events during the remainder of the Olmert government including Hamas’s victory in the Palestinian legislative elections and the ensuing forceful takeover of the Gaza Strip; the destruction of the Syrian nuclear reactor by Israel; the resumption of the Israeli-Syrian peace negotiations through Turkish mediation; the unprecedented peace offer made by Olmert to the Palestinians; and Operation Cast Lead. The chapter provides the first analysis of the Olmert government in the context of Israel’s foreign policy since the end of the Cold War. It exposes the reasons why Israel’s offensive foreign policy towards Syria succeeded while its attempt to reinvigorate its foreign policy of engagement failed. The chapter highlights the cleavages within Israel’s leading decisions-makers and the waning domestic support for engagement.