An interesting article in the “Dirty Little Secrets” section of Strategy Military Page, which describes some of the actual practices used by Israeli security to combat Palestinian terrorism. I’ve excerpted some pertinent paragraphs:
The key to Israeli success was an informant network within the Palestinian community. The Israelis have hundreds of police and military operatives who can pass as Arabs (their families came from Arab countries shortly after Israel was founded in 1947). These Israelis speak fluent Arabic (with a Palestinian accent) and are Arab in appearance…
Actually, the Israelis gain a lot of information on terrorists via electronic intelligence work and UAVs that are constantly in the air over Palestinian neighborhoods. They seek to make the terrorists think that its the gadgets, not informants, that is gathering the information. To the Israelis, inducing paranoia among the Palestinians is seen as a successful weapon. All this has kept helped keep the terrorists out of Israel for the last three years, something no one thought was possible.