Following Israel's announcement that it would retake Palestinian land following terrorist attacks, Yasser Arafat called on Palestinians to stop the attacks.
I think this new plan can be effective, as long as Israel is willing to return the land when the attacks stop. Furthermore, I think it can easily be combined with a proposal like the one I stated earlier, in which Israel offers to give complete Palestinian control over a piece of disputed territory if the attacks stop for a substantial amount of time.
Because many Palestinians believe "martyrdom" is the path to heaven, and because pro-Palestinians groups provide financial rewards to the families of suicide bombers, Israel needs to use "carrot and stick" methods to stop terrorism. Taking land following terrorist attacks, and granting land following periods of no attacks, are virtually the only techniques at Israel's disposal to make suicide bombings unattractive to the Palestinians.
William Saletan posts a similar analysis of the new policy on Slate. He points out that this new policy is in fact an extension of the idea of 'land for peace': "Take our peace, lose your land."