After reaching a late-night deal on a new coalition, Israel's Benjamin Netanyahu signed an agreement Thursday giving a senior role to the far-right Jewish Home that firmly opposes a Palestinian state.
Following six weeks of intensive negotiations, the Israeli premier finally managed to forge a government late on Wednesday, just an hour before a legal deadline. Had he failed, he would have forfeited his position as premier.
The composition of Netanyahu's rightwing, religious coalition marks a new shift to the right by giving increased prominence to Naftali Bennett's nationalist-religious Jewish Home party, which strongly backs settlement activity.
The move looks set to likely to complicate Israel's damaged relationship with the Palestinians and further strain ties with the international community.
But with a wafer-thin majority of 61 of the Knesset's 120 seats, the coalition looked set to face an uphill battle for survival, with commentators unanimous that Netanyahu would seek to broaden it out in the coming months.
Analysts said there was not likely to be any immediate change in Israel's policy towards the Palestinians, while acknowledging that Bennett's strong position at the table would likely strengthen the settlement enterprise.
As the new government took shape, Israel gave the green light for construction of another 900 new homes in Ramat Shlomo, a settlement neighbourhood east Jerusalem, the Peace Now settlement watchdog said.
The Palestinians immediately denounced Netanyahu's new administration, with chief negotiator Saeb Erakat saying it was clear it would not be working for peace and would seek to expand settlements.
This coalition "will be one of war which will be against peace and stability in our region," he told AFP.
"This government will set its sights on killing and reinforcing settlement activities," he said of Israel's ongoing construction on land the Palestinians want for a future state.
But Jonathan Rynhold, a political analyst from the Begin-Sadat Centre, warned against jumping to conclusions, saying the composition of the government could change "very quickly" in the coming months.
"Assuming that the government starts off narrow and rightwing, the international position of Israel will obviously become more difficult," he told AFP.
Under terms of the agreement, Bennett and his party will take several key portfolios, including justice and education, as well as control of the World Zionist Organisation's settlement division, which transfers money to settlements.
The party will have two seats in the security cabinet and his number two, Uri Ariel, will also become deputy defence minister with responsibility for the Civil Administration that runs all civilian affairs in most of the occupied West Bank.
- Impact on settlements -