That is a common tale of two nations, Greece in early 19th century and Israel in the 20th century (1). The driving force behind this success was the “Great Idea” (“Μεγάλη Ιδέα”) in Greece and “Zionism” in Israel. The underlying structures, mechanisms and to a great extent results are the same.
The end of the story for Greece was bitter but hopeful. In all their zeal for the glory of Greece, Greeks went a bit too far inside Turkey. Eventually, the national disaster of 1921 (“Μικρασιατική καταστροφή”) sealed the borders with blood and terminated the territorial expansion of this country. After that, the energy of the nation was focused in “organic growth”, the new battles were in the social, economic and cultural arenas -with admittedly positive results (2).
Contrary to expansionist 19th century Greece, Israel's assertiveness was mostly driven by its hostile neighbors; however the critical issue remains the same: realizing the limitations of the nation and settling the borders. Israel luckily did not face any disaster up to now. Ariel Sharon was a statesman who tried to finish the territorial issue while Israel is still the strongest player in the region, on his country’s terms. He dared to face first the leftwing peaceniks and then the ultra-orthodox fanatics and unilaterally remove the settlers from Gaza and parts of West Bank. But Sharon is not there anymore and Olmert looks too clumsy to finish the job of his predecessor. We all hope that it will not take a disaster for Israel to be done with the territorial issue.
(1). It can be fairly argued that the same historical pattern of a strong national ideology that initially can successfully lead new nations but eventually reaches its limitations, can be seen elsewhere, e.g. Japan and Germany.
(2) A couple of Nobels, relative economic and political success unseen before in the most backwarding region of the Europe, the Balkans.