While February's parliamentary elections in Israel signalled a move to the right by the Israeli population, the results have been tempered by the manoeuvring of incoming Prime Minister Benjamin Netanyahu. By persuading the severely weakened Labor party (they came in fourth behind Likud, the centrist Kadima party headed by Tzipi Livni, and by a Russian-émigré dominated right wing party, Israel Beitenu) to join his government, Netanyahu has taken the right-wing gloss off of his party. But whether there is anything beneath the sheen, and indeed whether there is any real hope for the middle east peace process, could depend on outside forces.
This new government is a triumph for two men: Netanyahu and his incoming defence minister, Ehud Barak, who dramatically brought his Labour party back to government, even though it endured the worst electoral showing in the history of the state.
There's a saying in Israel that a politician "doesn't want to give up his Volvo"—the car usually offered to government ministers. In Labor's case, this was certainly the reason for arguing their way back in. Barak and the older half of his party—ministers like "Fuad" Ben Eliezer and Matan Vilnai—are men who have nothing to do outside of government and see their roles as ministers as their own private full employment policy.
Barak has no ties to anything resembling Labor's traditional role; he is no socialist, he isn't really a dove and he has no real regard for the institutions that this once-proud party built. But he enjoys being defence minister and he was willing to sacrifice his party's regeneration by forcing the left-leaning half of his Knesset members into Netanyahu's government.
There is also a shadow leader in Labor today: Ofer Eini, the powerful head of the Histadrut Trade Union Federation. Eini holds no government position, yet his control of the union ensures him great power within Labor. He was concerned that Netanyahu's free market ideology would harm the Histadrut workers and fought successfully not only to get Labor inside government, but also to get a more temperate economic plan agreed upon.
For Eini the economic concern is domestic, but for Netanyahu, who wants to be a player on the world stage, the economic concerns are global. EU president Karel Schwarzenberg recently commented that ties between Israel and the EU would suffer if Israel did not pursue Palestinian statehood. The warning came as Netanyahu was assembling the new government. With the EU as Israel's largest market for exports and its second largest source of imports after the US, it's likely that the message did not fall on deaf ears.
The new Israeli government includes competing interests and agendas. The incoming foreign minister, Israel Beiteinu leader Avigdor Lieberman possesses a strong domestic constituency, and will be closely watched by Netanyahu. He has made a name for himself by calling for all Palestinian citizens of Israel to be relocated to a future Palestinian state. However his voters are primarily immigrants from the former Soviet Union who want civil rather than religious rights inside Israel, since many of them come from mixed Jewish and non-Jewish backgrounds.
This goal clashes with the heavily religious parties that are also part of this new government, and so in this area Netanyahu faces stalemate. But as vile as Lieberman's views are regarding Palestinians, he is not necessarily an obstacle in creating two states; in fact, he supports a Palestinian state and has said publicly that he would personally uproot from his West Bank settlement to allow such a state to exist.
Still, it is international pressure, rather than domestic, that will propel Netanyahu toward serious or pragmatic engagement with the Palestinians—if at all. He has said that he supports economic viability for the Palestinians, but not a state. This is a completely untenable position. However, as a man of finance, he is fully aware of the power that the EU yields over Israel's economy, and as man of the world—and an expert on America—he is equally aware of President Obama's popularity and agenda for the region. Indeed, Netanyahu would probably like nothing better than to preside over Israel's entry to the EU as a full partner, something to which the Israelis yearn for, but which is untenable without a Palestinian state by their side.
It will take a political miracle to enable a serious engagement toward a two-state solution between Israel and Palestine. However, as before, any hope of such dialogue taking place lies not in Netanyahu's government, but on the EU and US insisting on it.
