April 1 (Bloomberg) -- Benjamin Netanyahu, who fought most of the past decade for a second chance as Israel’s leader, assumed the premiership yesterday with a pledge to pursue peace talks while stopping short of supporting a Palestinian state.
Less than three months after an Israel offensive in the Gaza Strip, Netanyahu said in his inaugural speech that his government would “engage in negotiations with the Palestinians for a permanent settlement.” The Palestinians should “have all the powers they need to rule themselves except for those that endanger Israel’s existence and security,” he said.
The Knesset, as the parliament is known, voted in the new government late yesterday. Netanyahu, 59, said he would promote economic development in the West Bank and would support strengthening the Palestinian Authority security forces provided they fought terrorism.
The new premier, who goes by the nickname Bibi, didn’t endorse a Palestinian state. The stance marks a departure from the outgoing coalition headed by Ehud Olmert, who supported a two-state solution and pursued peace talks with Syria, which Netanyahu didn’t mention.
Netanyahu, prime minister from 1996 to 1999, takes power at a time when the nation’s economy is shrinking and the country still faces international criticism for the three-week Gaza offensive, in which more than 1,300 Palestinians and 13 Israelis were killed.
‘Radical Islam’
Israel’s biggest security challenge is “the rise and spread of radical Islam” and the danger that “a radical regime will be armed with nuclear weapons,” Netanyahu said. He has frequently described Iran’s nuclear program as his nation’s greatest threat.
His Likud faction is among a majority of parties in the new government that don’t support full Palestinian statehood, or the type of territorial concessions in the West Bank and Golan Heights that the Palestinians and Syrians say are critical to a peace deal. The stance may cause friction with U.S. President Barack Obama, who in a March press conference said it is “critical for us to advance a two-state solution.”
The government “can minimize the statements and actions that would bring condemnation,” said Mark Heller, a principle research associate at the Institute for National Security Studies at Tel Aviv University.
One such action would be the expansion of Israeli settlements in the West Bank, a move the U.S., the Palestinians and the European Union consider an obstacle to peace.
Building in Settlements
Israel’s Peace Now organization said last month the Housing Ministry has provisional plans to build 73,302 new housing units in West Bank settlements. Palestinian Authority President Mahmoud Abbas said at an Arab League summit in Doha this week that such construction would render peace negotiations “sterile.”
The rift between Abbas and the Islamic militant movement Hamas, which ousted Abbas’s forces from Gaza in June 2007, will lessen pressure on Netanyahu to move ahead on peace talks, said Jonathan Spyer, a senior researcher at the Interdisciplinary Center in Herzliya. Abbas governs the West Bank.
“As long as there are two Palestinian entities, it won’t be difficult for Netanyahu to make the case that while he is in favor of talks and wants to encourage economic peace and development, it is fairly clear that there is no possibility for substantive diplomatic progress,” Spyer said.
Deposed Hamas prime minister Ismail Haniya said Netanyahu’s government presents a clear contrast with the outgoing coalition.
‘Clearer’ Stance
“This might be a government that is clearer in its stance and that is better than a government that kills and destroys while at the same time talks about peace,” Haniya said in an e- mailed statement.
Israel ended its offensive against Hamas in Gaza on Jan. 18, after sending troops into the seaside enclave in what it said was a bid to stop rocket attacks on its southern towns and cities.
Two rockets launched from Gaza hit Israel yesterday, after two Palestinians were killed by an Israeli air force strike. The Palestinians were trying to plant a bomb along the Gaza border fence, the army said.
Netanyahu said he would “determine and steer economic policy” in the face of the global economic crisis. The Bank of Israel forecasts a 1.5 percent economic contraction this year.
Netanyahu crafted a ruling coalition after national elections on Feb. 10. The government holds 69 of the 120 seats in the Knesset.
Accusation of Treason
Likud, with 27 seats in the Knesset, has as its senior coalition partner Yisrael Beitenu, with 15 seats. Its leader, Avigdor Lieberman, who will serve as foreign minister, has accused Israeli Arabs of treason. He also said last year that Egypt, one of only two Arab states to sign a peace treaty with Israel, is “waiting for the right moment” to attack Israel.
Netanyahu brought in the 13-seat Labor faction, which supports a two-state solution, to balance Yisrael Beitenu and two smaller religious parties, Shas and Jewish Home, which are also skeptical of the peace process. Labor leader Ehud Barak will serve as defense minister, as he did in the previous government.
“It is fairly clear that it was important to Netanyahu to have as broad a government as possible and to pay such a high price to keep Barak in the defense ministry primarily because Israel is likely to face decisions of strategic importance with regard to Iran,” Spyer said.
Outgoing Foreign Minister Tzipi Livni will head the opposition. Livni turned down Netanyahu’s offer to join his government.
Israel’s benchmark stock index, the TA-25 Index, rose 0.95 percent to 728.35 yesterday in Tel Aviv.
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