Since the end of the Summer 2006, Second Lebanon War between Israel and the Hizbollah organization, Israel-Syria relations, and Israel's relations with the entire Arab World, have fluctuated between concern over the outbreak of a confrontation and hope for renewing the peace process between the Israel and Syria and Israel and the Palestinians, with possibly achieving a breakthrough. Indeed, in April 2008, half a year after the Israeli attack against the Syrian nuclear reactor in Northern Syria, Damascus announced renewal of contacts with Israel, albeit as indirect talks with Turkish mediation. Syria thereby signaled its preference for a political option. However, as is well known, this step was not enough to generate a genuine political process between Damascus and Jerusalem. Thus in light of the difficulty of advancing a real political process between Israel and Syria, the two continue to invest their efforts in preserving the fragile calm that seemed especially tenuous in the wake of the Second Lebanon War and was re-established following the Israeli attack in Syria on September 6, 2007, though one may assume it will be tested again in the foreseeable future. Indeed, Israeli-Arab relation came under a test with the eruption of the current circle of violence in Gaza in late December 2008. It is still too early to forecast or even assess what might be the long run implications of the Israeli operation, however it seems that the alliance of the moderates in the region survived, and that the radical camp suffered a severe blow, although was nor defeated. Thus, the region is waiting for the Obama's administration to consolidate its policy towards the regional problems, as well as for the results of the February Israeli general elections and to the forming of the new Israel government to see whether the peace process can be resumed or there will be a long halt, which will give once gains rise to radical forces in this troubled region. This paper will, in part, be based on interviews with members of the Israeli Foreign Ministry and the Israeli security community