“An act of terror,” Israel’s chief-of-staff Dan Halutz called the Palestinian raid on an Israeli military outpost on the periphery of the Gaza Strip last Sunday, in which two Israeli soldiers were killed, several more were wounded, and one, 19-year-old Gilad Shalit, was captured and is now being held in Palestinian territory.

It was in fact anything but that. If terror consists of randomly killing and maiming non-combatant civilians for the purpose of sowing fear and insecurity, Sunday’s raid, carried out by the military wing of Hamas, was the antithesis: A well-planned and well-executed attack on a strictly military target that was chosen long in advance and reached through the laborious digging of an underground tunnel half-a-mile long.

Why, when geologists can detect relatively minor underground tremors deep in the earth, Israeli scientists have been unable to develop equipment to detect the digging of tunnels, which have been widely used by Gaza Palestinians for the smuggling of weapons and occasional raids on Israeli positions, is a question in itself. What is not in question, though, is that if Israel and the Palestinian Authority are in a state of war, the attack in question was a perfectly legitimate act of war.

Indeed one might say, with one’s tongue only partially in one’s cheek, that attacks like Sunday’s, if the alternative to them is suicide bombs, should be encouraged by Israel. Since its inception, the greatest blot on the generally unsavory record of the Palestinian “liberation movement” has been its clear preference for terror over military action. For every Palestinian attack on Israeli soldiers in the four decades since the 1967 war, there have been many dozens of attacks on Israeli civilians, even though in many cases it would have been just as easy to target soldiers.

True, soldiers shoot back and civilians generally don’t. But if you are a suicide bomber sworn to die anyway, why not trade your bomb for a gun and open fire on soldiers, who are not exactly difficult to find in Israel? The only real answer to this question is that the Palestinian organizations have wanted to kill civilians rather than soldiers because this is precisely the message they have wished to deliver – namely, that their enemy is not specifically the Israeli “occupation,” nor even the Israeli army, but the entire Jewish population of Israel.

And it is because of this, too, that the Israeli response to Sunday’s raid should not be Chief-of-Staff Halutz’s. Rather, it should be: “Fair enough! You fought this time like soldiers rather than like terrorists – we will treat you this time like soldiers rather than like terrorists.”

In practice, this means two things. The first is that, if Hamas wishes to suggest a prisoner exchange in which Gilad Shalit is swapped for Palestinians in Israeli jails, Israel’s response should not be an automatic “No.” It should be: “Very well. We will not swap terrorists for an Israeli soldier because an Israeli soldier is not a terrorist, but among the many Palestinians incarcerated by us there is a small number that behaved like soldiers and attacked only soldiers on our side – and about them we are willing to negotiate.”

The second thing is to make it clear that, as far as the government of Israel is concerned, it and the Palestinian Authority are now in a state of war and that Israeli policies will be adjusted accordingly.

Until now, ever since the creation of the Palestinian Authority by the 1993 Oslo accord, Israel’s relations with this Authority have been absurdly ambiguous. On the one hand, the PA has supported anti-Israel terror, both by funding it and its organizations, and by turning a blind eye to it when it has been committed and refusing to bring its perpetrators to justice. Yet on the other hand, because the Palestinian Authority has always publicly disclaimed responsibility for terroristic acts, and has mendaciously asserted that it is not to blame for them and has done all it could to prevent them, Israel has refrained from declaring it an enemy state.

Although this has been a gross charade all along, there have been perhaps justifiable political and diplomatic reasons, from an Israeli perspective, for allowing it to take place. But these reasons have now exhausted themselves. The Palestinian Authority now has a Hamas government – and however this government may twist or turn, and however it may have tried to disassociate itself from the hundreds of Kassam rockets shot from the Gaza Strip into Israel with its complicit knowledge in recent months, it can not disassociate itself from the Hamas soldiers who raided the Israeli outpost on Sunday.

Israel should therefore say to this government: “The charade is over. While we are willing to negotiate through neutral parties a prisoner exchange involving Gilad Shalit, we are also declaring war on you. From now on we will treat you as any country treats another country it is at war with. We will close all our borders with you, cease providing you with all services, and consider any branch of your government, any of its members, and anyone on your side contributing to your military effort, legitimate war targets. We will do our very best to avoid harming civilians, and we will expect you to do the same, but anyone else, from Prime Minister Ismail Heniya down, is from now until further notice a legitimate target. And when you’re ready to sue for peace-and-quiet, let us know.”

Rest assured that Hamas will sue fast. This time, though, Israel will have to insist that the quiet, if not the peace, be real and lasting.

Mr. Halkin is a contributing editor of The New York Sun.