TEL AVIV // Israeli prime minister Benjamin Netanyahu yesterday signed deals with new coalition partners giving major power to settlers and their backers, analysts say.
Mr Netanyahu will today inform the president, Shimon Peres, that he has formed a government and the cabinet is expected to be sworn in on Monday, two days before a visit by Barack Obama, the US president, to Israel and the West Bank.
The new government's pro-settler leanings are likely to lessen chances of restarting peace talks with Palestinians, who view Jewish settlements in the West Bank as the main impediment to establishing a state.
"The first thing this government needs to do is announce that it accepts the two-state solution and that it'll stop settlement activities," Saeb Erekat, a Palestinian negotiator, said yesterday.
"Otherwise, it'll just be a repetition of the previous government."
The post of defence minister, whose final nod is needed for any settlement construction, has been given to Moshe Yaalon, a former army chief and member of Mr Netanyahu's Likud party who favours expansion.
Mr Yaalon was a high-profile critic of Israel's 2005 withdrawal of settlers and soldiers from the Gaza Strip and has condemned Ehud Barak, his predecessor, for being too slow in approving settlement construction.
The addition to the coalition of Jewish Home, a pro-settler party that rejects Palestinian statehood and supports Israel annexing most of the West Bank, is also likely to help the settlement enterprise grow.
The party will control the housing ministry, and the industry, trade and labour ministry and the powerful parliamentary finance committee, both of which could shift more government benefits and funds to settlers.
"This will be a settler-friendly government, without a doubt," said Yossi Alpher, an Israeli political analyst. "With Jewish Home holding ministries like housing, it means budgets for the settlers, with Yaalon looking the other way because he is friendly to the settlers."
Such an approach is likely to put peace talks on the back burner, with Mr Netanyahu's coalition partners opting to focus on long-simmering internal issues such as reducing the power of the Jewish ultra-Orthodox minority.
A shift to domestic matters may also put off any Israeli strikes on the nuclear facilities of Iran, which Mr Netanyahu views as the major threat to Israel's security.
In the previous government, he and his defence minister were perceived to be the main advocates of such an attack. But Mr Yaalon also favours a diplomatic solution to curbing Iran's nuclear ambitions, suggesting that a strike should be a "last option".
The new coalition may also deal a blow to Israeli Palestinian parties.
Mr Netanyahu is under pressure from his new partners to raise the threshold a party needs to enter the parliament to 4 per cent of the total vote from 2 per cent.
In the January election, the two Arab parties and the joint Jewish-Arab movement all won less than 4 per cent of the vote.
Palestinian leaders, who have criticised Mr Netanyahu for settlement expansion, yesterday demanded that he express support for a state of Palestine when he swears in his government.
In 2009, less than three months after his second premiership began, he declared for the first time his support for a Palestinian state - albeit a "demilitarised" one.
Leaders of Yesh Atid, the fiercely secular party that has become the second-biggest coalition partner, have indicated their focus will not be on stopping state support for settlers, but on improving economic conditions for the middle class and battling ultra-Orthodox influence.
Yair Lapid, a former TV news anchor and head of Yesh Atid, supports settlement growth even in the case of new peace talks.
He also rejects granting the mostly Arab East Jerusalem to the Palestinians under any pact and has called Palestinian leader Mahmoud Abbas a fraud.
Mr Lapid will be named as finance minister, his spokesman said.
Yesh Atid's Shai Piron, a rabbi who lives in a Jewish settlement in the West Bank, is slated to become education minister.
Mr Piron said on Thursday that he would advance an initiative started by his right-wing predecessor for Israeli schools to visit the West Bank city of Hebron.
The idea was regarded as a bid by the right to strengthen Israel's hold on Hebron, home to more than 160,000 Palestinians and about 500 Jews.
Mr Piron has also been quoted in the past as telling his religious followers not to lease or sell property to Arabs.