Israeli President Reuven Rivlin formally asks Prime Minister Benjamin Netanyahu Wednesday to form a new government, after his conservative Likud party won the most votes in last week's parliamentary election.
Netanyahu said he accepts the task with a "deep sense of responsibility."
Distancing himself from some of his tough pre-election words, he said it is time to put the election behind, adding that he is the prime minister of all Israelis.
The choice of Benjamin Netanyahu to serve an unprecedented fourth-term as prime minister would indicate that a majority of voters in Israel prefer continuity in government policies over any far-reaching change.
Analysts, however, say this may not be possible as the next government faces major challenges both on the domestic front and in the international arena.
Domestic issues
Many Israelis voted for Netanyahu because of his strong stance on security; but, domestic issues dominated the campaign.
Political analyst Mark Lavie says many Israeli voters are unhappy over the high cost of living and the growing gap between the wealthy and the middle class.
“Benjamin Netanyahu is definitely a free market type whose policies have actually exacerbated that problem and it's not very likely that's to change. But the fact that at least half of the members of his own incoming coalition are going to be concentrating on these domestic issues, if there isn't progress they could pull out of his government and Israel could face yet another election in the next couple of years," said Lavie.
One of the reasons for the collapse of the previous government - and of the early election - was disagreement over economic policies between Mr. Netanyahu and center-left parties in government that advocated more ambitious reforms.
The king-maker in last week’s election is a new center-right party whose leader, former Likud member Moshe Kahlon, is likely to become finance minister. He says his primary goal is to reform the housing ministry and encourage greater business competition.
Iran tops international issues
Analysts say international issues, nevertheless, remain important.
Many Israelis remain deeply worried that the negotiations over Iran’s reported nuclear weapons program will allow Tehran, which calls for the destruction of Israel, to acquire the bomb. Iran denies it has such intentions.
An analyst with Tel Aviv's Institute for National Security Studies, Oded Eran, says Israel needs to remain in the debate regardless of whether the negotiations succeed or fail.
“Whether we like the agreement or not there is still room for a dialogue on the issue in the eventuality of an agreement, or in the eventuality of no agreement," said Eran. "What happens then to the sanctions? What happens to the steps that should be taken in order to prevent Iran to pursue [from pursuing] their activities?"
Palestinian issue
If a nuclear armed Iran is viewed in Israel as the most serious threat, the closest threat is the Israeli-Palestinian conflict.
Lavie says many Israelis have lost hope in the negotiations to end the conflict and create a Palestinian state, so either the conflict must be contained or a different solution must be sought.
“Very, very smart people need to sit down and figure out a new approach to this problem, a new way to attack it because just going back to the negotiating table and talking is not going to do it," said Lavie.
Growing frustration in Europe and the United States over the stalled negotiations is leading to rising calls for more pressure on Israel, including sanctions and diplomatic isolation.
Columnist Shlomo Avineri says international pressure is not likely to work.
“At the end of the day and for better or for worse, a Palestinian state can be established not so much by pressure on Israel - pressure on Israel works in the exact opposite direction. The only way to establish a Palestinian state is by negotiations," said Avineri.
Netanyahu’s statement on election day that he did not foresee a Palestinian state during his time underscored this concern, although the prime minister later sought to tone down his remark.
Analysts say, however, that once the campaign rhetoric has been forgotten and the realities of governing set in, new efforts to re-start the negotiations could begin. And they say Mr. Netanyahu, given the dominance of his party in any coalition, will wield considerable power in deciding what course the government is to take.
Some material for this report came from AP and Reuters.
