The political outlook will remain challenging, given the fractious nature of coalition politics in Israel. Thirteen parties are represented in the Knesset (parliament) and six in the government, which is led by the Likud party. Following the recent splintering of the Labour Party and its decision to go into opposition, the government controls 66 of the 120 Knesset seats, compared with 74 previously. The cohesion of the coalition will continue to be tested. Although the right-wing bias of Likud (which is led by the prime minister, Binyamin Netanyahu) and its coalition partners provides some ideological glue, there are a number of contentious issues that could easily lead to a rupture.

In the near term, the vexed question of settlement building in the West Bank and East Jerusalem is unlikely to prove such a divisive issue for the coalition as it was in the days when Labour was on board. But the rapidly-changing political circumstances in the Middle East have inserted a new factor into the equation. In particular, the ousting of the Egyptian president, Hosni Mubarak-a stout defender of the 32-year-old peace treaty between the two countries-threatens to increase Israel's international isolation. It has also added to the clamour from those (including the US) who argue that Israel needs to make much stronger efforts to secure a peace deal with the Palestinians. Although the US recently vetoed a UN Security Council resolution condemning Israeli settlements in the West Bank, there are signs that US patience may be wearing thin. There is likely to be concerted pressure from the US to resuscitate the stalled peace talks-much to the discomfort of Mr Netanyahu, who knows that this is an issue which could split his coalition. On the domestic front, draft legislation designed to ease the process of conversion to Judaism-backed by Yisrael Beiteinu, the second-largest party in the coalition, but opposed by Shas, the third-largest party in the government-has been the source of growing tensions. Mr Netanyahu has stepped into the fray by freezing the passage of the legislation. However, this has set him on a direct collision course with Avigdor Lieberman, the foreign minister and leader of Yisrael Beiteinu.