Problem: Lebanon and Gaza shoot rockets and send suicide bombers into Israel, requiring Israel to respond by militarily fighting terrorists who hide among their populace, resulting in civilian casualties.
Solution: Create a tariff/subsidy system on specifically chosen Lebanese/Gazan goods whose amount determined by the number of terrorist attacks on Israel within a given period.
As my friend Kyle points out often, the leadership of a country doesn't always represent the populace of a country. Therefore, the goal of a military operation against a terrorist leadership should be to weaken the government, both directly, and by aligning popular support against the government and in favor of peace.
Bombing Lebanon, however, galvanizes Lebanese support behind Hezbollah, because the US/Israel bombs the populace and Hezbollah gives the populace food and infrastructure.
One partial solution is to target goods whose producers are particularly important to Hezbollah's popular support, and create a tariff or subsidy directly related to the number of terrorist attacks.
For example (all numbers and goods arbitrary), if the producers of wheat are absolutely necessary for Hezbollah to stay in power, then enact a subsidy of 10 - (X/2) cents per bushel of Lebanese wheat, where X is equal to the number of rockets fired into Israel in the last year+the number of casualties of terrorist acts originating in Lebanon in the last year.
If no rockets are fired and nobody dies in Israel as a result of terrorism, Lebanese wheat gets a 10 cent subsidy, and Lebanese wheat producers do really well. If 20 rockets are fired, they have to compete on equal ground with everyone in the rest of the world. If 40 rockets are fired, Lebanon faces a 10 cent per bushel tariff on their wheat, which cripples their economy until a year has passed.
Hezbollah needs to maintain power, so they need to cater to the wheat producers, who are pivotal to their support. They stop firing rockets. By necessity, this diverts funds towards peaceful reconstruction. As they build more, they have more to lose, so this policy strengthens in deterrence over time.
You can simultaneously do this to goods whose production involves the people who are currently building/firing rockets. If people who fire rockets are the type of people who mine coal, then enacting this type of structure with coal means that Lebanese coal mines do better with no rockets, so there's a greater demand for laborers, so coal mines pay better and hire more, diverting people from rocket making to coal mining.
I don't know what goods Lebanon exports, but this sort of structure could become quite powerful if they have good ones. All numbers entirely arbitrary (if you want it to be just a penalty, you could start at no subsidy and increase the tariff. Just a reward doesn't work for the power base tariffs, because there's no more incentive once you hit 0, but it does work for the substitute-jobs subsidies, because you dont want to create disincentives for terrorists to switch jobs)