The political outlook will remain challenging, given the fractious nature of coalition politics in Israel. Twelve parties are represented in the Knesset (parliament) and six in the government. Despite this fragmentation, both the Knesset and the government of the Likud party, led by Binyamin Netanyahu, have a right-wing bent. The current coalition arrangements provide the government with a comfortable parliamentary majority; it controls 74 of the 120 Knesset seats. Most of Likud's coalition partners, given their right-wing leanings, are likely to think twice before moving into opposition.

Nevertheless, disagreements between the coalition partners have recently spilled out into the open, fuelled by divergent views about the peace process and the vexed question of settlement building in the West Bank. Avigdor Lieberman, the foreign minister and head of Yisrael Beiteinu-the second-largest party in the coalition-strongly opposed the resumption of direct peace talks between Israel and the Palestinian Authority at the start of September. The talks lasted only three weeks. But Mr Lieberman then obstructed attempts to re-kindle the dialogue, by refusing to back a new moratorium on construction in the West Bank and East Jerusalem. Despite strong pressure from the US, Mr Netanyahu was evidently unwilling to risk the departure of Yisrael Beiteinu, and possibly other right-wing parties, from the coalition by agreeing to a fresh settlement freeze. In early December the US acknowledged that it had failed in its attempts to re-launch the talks. While pacifying Mr Netanyahu's right-wing partners, this has exacerbated tensions within the left-leaning Labour Party, the third-largest grouping within the coalition. Many of its senior members are angry that the peace process has stalled, and its leader, the current defence minister, Ehud Barak, is under mounting pressure to call a leadership contest.