If Israel declares war, then they'll win, simple as. The Israeli war machine is, pound for pound, without compare in the entire world.
Was that a deliberate off the cuff comment or are you really that deluded?
Let's look at this for a second. Israel's biggest backer is the US. Israel have limited support in the EU. Russia are in bed with China, who are against Israel. The EU needs to stay on good terms with Russia as they virtually have their fingers on the gas valve that provides power for most of the European powers (including Great Britain, France, Spain, Italy, Belgium, The Netherlands, etc). The UN have now allowed Palestine to put forward a case for official recognition.
China basically own the US (the US owe so much money to China now they can not risk the inflation of the interest on those loans or their entire financial structure could completely collapse on a scale not seen since post-World War One), the US can not afford (literally) to speak out against the Arab League or the UN on issues regarding Israel. The EU needs to be cordially invited to intervene in Arab affairs by the Arab League (this was the case with the Libya Civil War, NATO had to first have backing from other North African and Islamic nations before they could implement the "no-fly-zone").
The US's record of fighting a conflict alone is not good (0 Victories), so Israel can expect no backing from NATO if the worst happens.
I haven't even touched on the fact that one wrong move from Israel may cause a major inter-Arabia War, which will, considering the momentum after the "Arab Spring", expand to the outer-Arabian Peninsular (Involving the like of Turkey, Iran, China, Russia, India, Pakistan etc). Like I said, China will ensure the US will not aide Israel or threaten to place an embargo on them and raise their interest rates (China will get the backing of Russia and North Korea - China and Russia will also block any UN resolution that is pro-Israel, being members of the UN Security Council), also remember that the UN is anti-Israel, by allowing Palestine a platform of which to argue their case, a situation which they have not allowed to other un-recognised states like, the "Nagorno-Karabakh Republic", the "Republic of Abkhazia", the "Republic of China", the "Republic of South Ossetia" etc.
If you are limiting your argument rather naively to military power, then I would like to remind you that the this is 2011 and Lebanon, Syria, UAE, Saudi Arabia, Egypt, Yemen, Morocco, Libya (now that we have sent the Transitional Government stockpiles of weapons from the US and the UK which include, but are not limited to, advanced assault rifles, third-generation missile guidance systems, RPA Drones), etc. All have access to virtually the same type of equipment that Israel do. The arms race is now a "Cold-War" phenomenon, it's no longer relevent.
Faithfully, a student of Philosophy, Politics and Economic - Cardiff University.