Are we at war?

Olmert announced that Israeli incursions in Gaza will continue, since “we are in the state of war.” That an incredible statement from the government which only half-heartedly recognized Gaza a “hostile territory” rather than an “enemy territory.” If we’re at war with Palestinians, then stop the peace talks and bomb them into the dust, no?
Olmert, smart as usual, laughed out Israel’s propaganda attempts, “Whoever thinks that TV speeches will silence international criticism, is wrong.” Very well, but why Israel stays in the anti-Semitic UN then?