Bradley Burston calls the siege of Gaza the worst mistake Israel has made in a decade:
The stated goal of the siege was to undermine Hamas and to goad Gazans into rejecting Hamas rule. The effect of the siege has been to focus and intensify Palestinian anger against Israel, increase Gazans' dependency on Hamas social welfare arms, enrich Hamas coffers through tunnel taxation and foreign donations, and sap Palestinian support for Fatah, which, through its back-channel encouragement for the siege, is seen as a betrayer and a boot-licker in the eyes of many Palestinians.
He lists nine more very compelling reasons why the siege is a miserable mistake. For my money, the worst mistake Israel made was the mistake that led, ultimately, to the siege of Gaza: The 2005 unilateral withdrawal. Leaving Gaza wasn't the problem, of course -- you'd think the Jews would have learned sooner (see: Samson) that Gaza is no good for Jews, and Ariel Sharon was right to get out. But the method he used was tragic. By refusing to negotiate his exit from Gaza, he strengthened the hand of Hamas. If he had negotiated the withdrawal with the Palestinian Authority, he would have a) extracted concessions from the Palestinians, and b) strengthened the moderates. The moderates would have been credited by their people for coaxing Israel out of Gaza. Instead, Hamas won the round, and then won the election, and then won the coup, and then, in a way, won the most recent war against Israel, and certainly the public relations war, which is the sort of war that really matters in the Middle East, and which Israel almost never fails to lose.