At the 1972 Summer Olympics in Munich, Palestinian terrorists ambushed the Israeli Olympic teams, killing two people and taking nine more hostage.  After West Germany attempted and failed to negotiate the hostages out of danger, they were killed during a poorly planned ambush by West German police officers.

According to the German magazine Der Spiegel, in the weeks preceding the Olympics, German officials received a tip from a Palestinian informant in Beirut that Palestinians were planning an “incident” at the Olympics.  Shmuel Lalkin, the head of the Israeli Olympic delegation, had also raised concerns about the Games’ lack of security measures.  Having analyzed the Israeli accommodations, he deduced that they would be at increased risk of an attack.  In addition, the West Germans had hired a forensic psychologist to create some terror scenarios that could occur at the Games, to help prepare the Germans.  The psychologist, Georg Sieber, created twenty-six such scenarios, among them Palestiinian terrorists invading the Olympic village and taking Israeli hostages.  Despite all this, however, no extra measures were taken, so as not to interfere with West Germany’s attempt at distancing themselves from the military themes of 1936, the last time Germany had hosted an Olympics.

To free the hostages, West Germany insisted on sending in regular police officers (as opposed to highly skilled Israeli operatives) who were first told not to risk their own lives to save the Israelis. Immediately before the operation started, a number of West German policemen posing as flight attendants voted to abandon ship in order to save their own asses, leaving only the snipers, who were armed with shorter range guns than were necessary.  This failure to let more prepared personnel take on the terrorists, to prepare the personnel they had adequately to take on the terrorists, and in some cases failure to take on the terrorists at all, led to the murder of all the hostages. 

During the failed rescue operation, five of the eight terrorists were killed, and the other three were arrested by West Germany.   Less than two months later, a Lufthansa flight from Beirut to Munich was hijacked by Black September members, who demanded the release of those three terrorists.

Four years later in Entebbe, Uganda, Israel successfully executed a similar rescue mission to the one they would have tried in Munich.  One operative and four hostages died, and the other 102 hostages were rescued.

Golda Meir, the Prime Minister of Israel at the time, had a strict policy of not negotiating with terrorists, reasoning that doing so would incentivize future attacks.  I believe that, based on the 1972 Munich massacre, she was correct in this course of action.  Had they negotiated, they would have sent the message to every terrorist group that by kidnapping a few Israelis, Israel would negotiate.  Additionally, Israel would go on to have success in rescue operations similar to the one they wanted to attempt to rescue the Olympians, when they rescued over 100 civilians from a hijacked plane in Entebbe, Uganda.  That the Entebbe rescue (Operation Thunderbolt) took place in an enemy country only points to a potential rescue in Munich being more likely to end in success.  

Alongside the aforementioned benefits of not negotiating is the obvious downside to negotiating; there are now hundreds more terrorists on the streets, and though the eleven hostages may not have died, it is not unlikely that those terrorists released would kill even more.  For those reasons, negotiating with the terrorists would have led to more loss of Israeli or civilian life in the long run, and was right to be avoided by Israel.