Israeli prime minister Benjamin Netanyahu’s third coalition government was sworn in yesterday hours before U.S. president Barack Obama arrives for his first trip as president to Israel. 

The government that Netanyahu will lead following January’s elections to the Knesset (הכנסת), Israel’s unicameral parliament, is certainly the most tenuous one of Netanyahu’s career.

Despite the fact that Netanyahu’s center-right Likud (הַלִּכּוּד‎, ‘The Consolidation’), in electoral coalition with the more hawkish Yisrael Beiteinu (ישראל ביתנו‎, ‘Israel is Our Home’) won the greatest number of seats (31) in January’s election, the governing coalition is one that will be dominated less by Netanyahu and more by the two ‘winners’ of the election:

• Yair Lapid, a news reporter, anchor and the leader of Yesh Atid (יש עתיד, ‘There is a Future’), a new centrist party formed in 2012 that won 19 seats, and
• Naftali Bennett, Netanyahu’s former chief of staff from 2006 to 2008, a former spokesman for the settler movement, and the leader of the religious Zionist Bayit Yehudi (הבית היהודי, ‘The Jewish Home’) that won 12 seats.

In addition, the newly formed centrist party of former foreign minister Tzipi Livni, Hatnuah (התנועה, ‘The Movement’), with six seats, and the centrist party Livni once led, Kadima (קדימה, ‘Forward’), with two seats, will join the government.

Together, it will give Netanyahu a 70-seat coalition — a strong majority, despite the fact that his own party holds a minority of seats within the government he will now lead.

What does that mean for Israeli policy and for Israeli politics — at least for the foreseeable future?

Here are a dozen lessons that the new cabinet’s formation teaches us:

1. Netanyahu is weaker than ever. 

For those of you counting at home, Netanyahu’s Likud holds just 20 of the seats in the Knesset, and even together with Yisrael Beitenu, their combined bloc holds a minority of the seats within the new government.

Following the election, despite their vast differences, Bennett (pictured above, right) and Lapid (pictured above, left) formed what’s become a surprisingly enduring strategic alliance.  Together they forced Netanyahu to accept a coalition without the haredi parties that have been in each government since 2006 — the ultraorthodox parties Shas and United Torah Judaism.

Likud will hold just nine of the 22 ministries — Netanyahu was forced to agree to a slimmed-down cabinet, and he was forced to cede control over the education portfolio, formerly held by Likud heavyweight Gideon Sa’ar (who had at one point been tipped to become the next finance minister, but will now become interior minister instead).

It’s clear that Bennett and Lapid, so long as they remain strategically allied, will hold just as many seats as ‘Likud Beiteinu’ within the coalition (31), so they will have nearly as much power as Netanyahu in driving the agenda of the Israeli government, in the same way that they drove the haredim into opposition.

2. Lapid’s not thrilled to be finance minister.

In some ways, as the leader of the second-largest party in the Knesset, Lapid is a victim of his own success — he’ll take up the finance portfolio very reluctantly, with an extra 135 days to pull together a budget.

Lapid, who is no economist, will now be in charge of overseeing the 2013 budget process that is likely to see additional expenditure cuts at a time when Israelis are angry about inflation and unemployment and when the budget deficit last year topped 4%, and it could well drive down Lapid’s current widespread popularity in Israel.

Bayit Yehudi, meanwhile, will chair the finance committee of the Knesset, which means that the Bennett-Lapid alliance will be extremely crucial in the days ahead.  If there’s one issue that could bring the government down this year, it’s passing this budget.

3. The government will take up a new haredi service law.

Shas and United Torah Judaism are out of government, and are none too happy about that — some within their ranks are already calling the new coalition a ‘government of hate.’

But with the haredim on the opposition sidelines, the coalition seems certain to take up legislation that eliminates or significantly reduces the current religious exemption from compulsory two-year service in the Israeli Defense Forces — Lapid in particular has been extremely aggressive in demanding that the exemption be eliminated.

As Yossi Verter writes in an otherwise must-read piece in Haaretz that the ascendance of Bennett’s movement at Likud’s expense, taken together with the Lapid-Bennett alliance, has perhaps permanently ruptured the old arithmetic of the Israeli right by pitting Bennett’s settlers against the haredim and yeshiva supporters:

The alliance between Lapid and Bennett has undercut what has been known as the right wing bloc, by removing 18 ultra-Orthodox Knesset seats from the coalition and erecting a hostile barrier between Likud and the settlers. From here on, the ultra-Orthodox will go with the left and against the settlers. They will long remember the stinging slap in the face they have just received.

4. The government will take up a new election law.

Netanyahu’s new coalition will also consider a new election law that would change the current threshold for representation in the Knesset from 2% to 4% — seats are awarded on the basis of national proportional representation.  The previous election resulted in the most fragmented Knesset in Israeli history — no individual party holds more than 2o seats in the current Knesset (and that’s less than two decades after Israel featured essentially a two-party system).

If the threshold had been raised during the last election, Kadima and the three major Israeli Arab parties would have each failed to make it into the Knesset. Furthermore, the haredi United Torah Judaism, Livni’s party (Hatnuah) and Meretz (מרצ, ‘Energy’), a Zionist leftist party, all would have made it into the Knesset by a margin of just 1.2% or less.

5. Avigdor Lieberman could well return to government.

Netanyahu has shown some impressive loyalty to Lieberman, the leader of Yisrael Beiteinu, who is currently on trial for breach of trust, which is itself an appeal from a previous case in which Lieberman was found not guilty on graft and other charges.

Lieberman resigned as foreign minister in December 2012, and he largely remained on the sidelines during the election campaign, though Netanyahu has promised to hold the foreign ministry portfolio ‘in trust’ for Lieberman — if he avoids conviction, he will return as foreign minister.

Throughout the coalition horse-trading, voices from within Likud, Yesh Atid and Bayit Yehudi alike called for Netanyahu to put the foreign portfolio back into play, perhaps giving it to Lapid and reserving the finance ministry for Lieberman.

Netanyahu refused.

For now, Netanyahu remains acting foreign minister, which means that Israel will have no full-time foreign minister in the coming months, with Ukrainian-born Likud MK Ze’ev Elkin serving as deputy foreign minister.  Elkin, a hard-liner who is himself a settler, seems unlikely likely to soothe too many diplomatic tensions with the European Union or the United States.

6. Bennett is the heir apparent of the Israeli right.

Bennett himself will become the minister for economy and trade in the new government, but his real job will be to consolidate power as the leader of the ‘new right’ in Israel and the religious Zionist movement that is at the heart of Bayit Yehudi.  Under Bennett’s recent leadership, Bayit Yehudi quadrupled its representation in the Knesset.

Given the shift of the current Likud bloc to the right, it’s not an exaggeration to say that Bennett, and not Netanyahu, is the more representative leader of what the ‘Israeli right’ has become today (especially, as noted above, by sidelining Netanyahu’s old-school haredi allies).

Though Netanyahu will certainly not relinquish power anytime soon, and he will almost certainly lead Likud into the next election, it’s not inconceivable that Bennett could one day become the standard-bearer of an ever-more conservative Israeli right.

7. It’s the most pro-settler government in Israeli history.

The significant roles of Bennett and Elkin in the new government are only the tip of the iceberg — Bayit Yehudi MK Uri Ariel will become the housing minister, and Bennett is expected to use his wide-ranging brief to push pro-settlement policies even more vigorously, which will of course antagonize Palestinians in the West Bank and forbear the possibility of future peace talks:

Netanyahu in his weakness, and [Lapid] in his ignorance and callousness, have let the cat guard the cream. The money and the resources that Lapid has fought to take from the yeshivas will go directly or indirectly to build more and more settlements. Lapid’s middle-class voters who live within the 1967 borders will continue to ask where the money has gone.

Whether Bennett deploys more or less resources in favor of settlers, it seems virtually certain that there will be no settlement freeze so long as Bayit Yehudi remains in the government.

8. Livni is just another politician.

After the 2009 elections, Livni’s Kadima actually won more seats than Netanyahu’s Likud.  She resisted the opportunity to form a coalition with Netanyahu at the time, however, and she kept Kadima in the opposition until March 2012, when her Kadima colleagues ousted her in favor of former defense minister Shaul Mofaz, who promptly joined Netanyahu in government.

This time around, Livni was the first to sign a deal with Netanyahu to join his coalition — she will become justice minister and will have the right to lead any peace talks with the Palestinians, while her Hatnuah colleague Amir Peretz will become environmental protection minister.

It’s probably a great deal for Livni this time around, but it’s a case study in just how calculated these coalition decisions are — it’s less about ideological or principled posturing and more about getting a share of the resources that come with government and, above all, advancing one’s career.

9. The Palestinian peace process doesn’t seem likely to progress.

In giving the dovish Livni such a key role in leading peace talks with the Palestinians, Netanyahu may be signaling that he doesn’t fully expect there to be any such talks over the next Knesset — that’s certainly what Lieberman believes, and he’s probably right, especially given the pro-settler sentiment of the new government and the roles that the hawkish Lieberman and Bennett hold in the government.

If true, it would mean that Livni won’t be exercising any of the powers that Netanyahu has granted to her, though by bringing Livni into his government, Netanyahu was able to signal to the world that there would be at least one relatively pro-peace voice at the table.

10. Key security portfolios remain under Likud’s control.

Notwithstanding Livni’s role in any Palestinian talks, Netanyahu has nonetheless retained firm control over the direction of Israeli security and foreign policy.

Elkin, as noted above, will serve as deputy foreign minister in the new government (and could well be elevated as permanent foreign minister if Lieberman is convicted later this year).

Former IDF chief of staff Moshe Ya’alon, another Likud MK, will succeed his predecessor Ehud Barak at defense (Barak announced late last year he would not run in Knesset elections), and Barak may well return in the future to assist Netanyahu, perhaps as Israel’s ambassador to the United States.

Former Likud finance minister Yuval Steinitz will become the minister of international relations, strategy and intelligence, a new portfolio that appears to be causing more befuddlement than anything else, though Steinitz will be the chief minister in charge of setting policy with respect to Iran, making him a very key player in Netanyahu’s security cabinet.

Former Likud finance and foreign minister Silvan Shalom will remain minister for the development of the Negev and Galilee and regional development minister, as well as minister for energy and water.

11. Shelly Yacimovich is now the undisputed leader of the opposition. 

With Livni and Lapid both joining the coalition in key roles, two of the three major center-left parties in Israeli politics are now inside the government, not in opposition.  That gives Yacimovich, the leader of the Labor Party (מפלגת העבודה הישראלית), the role of the chief opposition leader of the Knesset.

Yacimovich made gains in the election, and she’ll control the third-largest bloc of seats (15) in the Knesset, but her campaign strategy of emphasizing economic issues didn’t result in quite the breakthrough for which she was hoping.

Nonetheless, Yacimovich has staked her position as the leading proponent of an activist government and a critic of growing income inequality and social injustice within Israel, so if the government (and Lapid, as its finance minister) fails to make economic progress over the next Knesset, Israeli voters might be even more willing to give Yacimovich and Labor a chance, and that approach was on display Tuesday:

‘The four of you, Netanyahu, Lapid, Bennett, and Livni are well-off, come from established families, and have never struggled for your livelihood – capitalists, let’s call it as it is. Your approach gave Israel the largest gaps between rich and poor in the Western world.’

If Yacimovich can burnish her credentials as a credible leader on security policy (even as she excoriated the new government’s economic policy, she pledged to support any deal that Netanyahu might reach in terms of the Palestinian peace process), she stands a very good chance of leveraging her role into a shot at becoming prime minister the next time around.

12. Elections are more likely than not before 2017.

If Bennett’s Bayit Yehudi leaves the government, it will fall to 58 MKs (a minority government).

If Lapid’s Yesh Atid leaves the government, it will fall to 51 MKs (an even flimsier minority government).

In the event that Bennett and/or Lapid decide to bolt the government at any point in the next four years, Netanyahu could conceivably bring Shas and United Torah Judaism back into government, which together hold 18 seats in the Knesset.  But if Bennett and Lapid leave the government together, it would fall to just 39 MKs, and the haredi parties wouldn’t bring the government back into majority territory.

That means that at any point between now and the end of the current Knesset in 2017, Bennett and Lapid could trigger snap elections whether Netanyahu likes it or not.

Photo credit to Yossi Zeliger/Flash90.