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Naftali Bennett, head of the Israeli hardline national religious party, Jewish Home, talks to students at a pre-military Yeshiva (religious school) in the village of Merkaz Shapira, during an election campaign visit on Sunday Image Credit: AFP

The unanticipated outcome of the Israeli election not only reflects the changing mood inside Israel, but US President Barack Obama’s agenda, too, as he embarks on his second term.

Last October, Benjamin Netanyahu was confident that he would lead a hard-line, right-wing alliance of his Likud party and Yisrael Beitenu, (headed by his former foreign minister, Avigdor Lieberman) to victory.

As a result, he brought the election date forward by eight months, seeking to consolidate power prior to implementing further austerity measures at home and promoting his ambitions for war with Iran and colony expansion.

At that time, there were neither impediments nor obvious competitors on the horizon and Netanyahu was confident that his old friend Mitt Romney would win the race for the White House in November.

As it turns out, Netanyahu dramatically misread both domestic and foreign opinion and while he remains in power by the skin of his teeth, the Likud-Beitenu alliance lost a quarter of its seats in the Knesset.

Many Israelis are justifiably anxious about their security in the face of growing instability in the region post-Arab revolutions and the resurgence of pro-Palestinian Islamist parties, which already dominate the governments of Tunisia and Egypt. The last thing they want is to further antagonise their neighbours.

In November, as Israeli war planes pounded Gaza, Hamas rockets reached the heart of Tel Aviv for the first time, sending thousands of Israelis racing for air raid shelters which had not been used for 21 years. Israel’s assault on Gaza not only failed to eradicate Hamas, but acted as a stick in a hornets’ nest. Many Israeli citizens fear a third intifada in which the Palestinians will be better supported and better armed than before, due to the changing political climate in the Arab world and the availability of sophisticated weapons from Libya and Iran.

Israelis are anxious, too, about the economy. In September 2011, almost half a million took to the streets in protest at the cost of living, and August 2012 saw mass rallies against tax rises and spending cuts.

Netanyahu’s election campaign largely ignored these domestic concerns, focusing instead on colony-building and war with Iran — two issues which, along with its abysmal treatment of the Palestinians, have earned Israel international pariah status and which many of its citizens are uncomfortable with.

Nor can the mounting antipathy between Netanyahu and Obama be left out of the equation. Netanyahu snubbed Obama by openly supporting Romney in the presidential polls — a move he may well now regret.

In his inaugural speech on the eve of the Israeli poll, Obama emphasised that a decade of war was over, sending out a clear message that he was not backing Netanyahu’s bellicose and provocative platform, nor would he support a continued refusal to negotiate with the Palestinians.

Obama’s appointment of Chuck Hagel as Defence Secretary is highly significant in this context, too, and was made despite a vigorous Zionist lobby smear-campaign against the man because he once voiced mild criticisms of Israel and opposed the war with Iraq.

During his first term in office, Obama largely concealed his personal dislike of the arrogant Israeli leader although nobody could forget that Nicolas Sarkozy-Obama exchange in November 2011 when they thought they were off-air: Sarkozy: “I can’t stand Netanyahu, he’s a liar”; Obama: “You’re sick of him? ... I have to deal with him every day!”

Now it seems the gloves are off. Just days before the Israeli election, Obama leaked comments to US journalist, Jeffrey Goldberg, describing Netanyahu as a self-defeating, political coward in thrall to the colonist lobby that is destroying and isolating his country by insisting on neo-colonialist, racist policies and strangling the peace process.

Obama’s comments cleared the way for a knockout blow delivered by British Foreign Secretary and friend of Israel, William Hague, who told the UK parliament that Netanyahu was responsible for killing the two-state solution and the entire peace process. The timing of Hague’s comments suggest a coordinated, two-pronged attack on the Likud leader.

Much of the above might explain Netanyahu’s fall from favour with the electorate. Meanwhile, new kids appeared on the Israeli political block: First, the ultra-right ‘Jewish Home’, led by former colonist leader Naftali Bennett, which gained 12 seats, making it the fourth largest party in the Knesset. ‘Jewish Home’ promised voters that it would annexe the entire West Bank, reject the two-state solution and refuse to talk to the Palestinians.

At the other end of the political spectrum, a centre-left alternative called Yesh Atid [‘there is a future’] led by television personality Yair Lapid, which scooped up 19 seats in its first appeal to the electorate. With an emphasis on middle-class aspirations and Israel’s socio-economic problems, Yair Lapid also lampooned Netanyahu as being completely out of touch and advocated renewed peace talks with the Palestinians.

Israeli politics has emerged from these elections more polarised than ever. Yet, for there to be a workable government, these disparate parties are to convene in what Netanyahu is calling “the broadest coalition possible”.

Whatever the eventual proportions of oil and water, administrative paralysis is inevitable. The good news is that war with Iran looks less likely than ever, now that Netanyahu has lost both his mandate and American support for such a project. How much the left will be able to apply a hand-brake to the right’s urgent land-grab in the West Bank remains to be seen but, under political pressure at home and from abroad, Netanyahu may reluctantly return to the negotiating table with the Palestinians.

Not that such a move will necessarily benefit the Palestinians: Netanyahu will likely remain intransigent on all the major issues, but the Palestinian National Authority leader, Mahmoud Abbas, may prefer peace talks to his on-going rapprochement with Hamas, thus damaging the Palestinian reconciliation process.

In a nutshell, this indecisive Israeli election result may create more, rather than less, instability and benefits no one ... except, perhaps, Barack Obama who may allow himself a discreet taste of that ancient dish they say is best served cold.

Abdel Bari Atwan is editor of the pan-Arab newspaper Al Quds Al Arabi. His latest book is After Bin Laden: Al Qaida, the Next Generation.