I could be wrong, but imo that's not what Sharon is doing. He recognizes that Israel doesn't have many friends, and a unilateral solution may be the only solution for the next few decades.
From a purely military perspective, it is wise to have all Israelis within the Israeli Wall and minimize all contact with the Palestinians.
The Israelis need labor for "the jobs that Israelis won't do"?
Fine. Import contract workers from Mexico......Free El Al flights from Mexico City to Tel Aviv for all Mexicans with worker's visas.
The Palestinians are getting out of hand in Gaza?
Fine. The Israeli Army and Air Force can still kick butt in Gaza from within Fortress Israel bases.
As things stand right now, some Israelis insist on the right to swim in shark infested waters and then demand that the IDF jump in to protect them whenever the sharks attack.
That not only puts themselves at unnecessary risk but also drains the resources of the IDF.
Sharon's Gaza decision has told those swimmers that they need to get back aboard the Good Ship Israel and stop jumping off the ship to have close encounters with the man-eating sharks.
The alternative is to kill every last shark and, in this day and age, that is not an option.
But continue to supply them with electricity and infrastructure
That is patently false. Caroline Glick just had an article about them allowing 100 thousand Arabs from the PA who are married to Arabs in Israel to move there. Separation is a myth.