The dust has far from settled after the tremor of Tuesday's election in Israel, but one thing is clear besides the obvious fact that Prime Minister Benjamin Netanyahu and his hardline Likud-Beiteinu list have suffered a serious setback: an internationally unknown former television anchor man, Yair Lapid, and his new centrist Yesh Atid party are now the kingmakers of Israeli politics.

Depending on Lapid's degree of wisdom and courage—both unknown quantities at the moment—that change might portend a check on Netanyahu's policy—accentuated during the election campaign—of foreclosing chances for a peace compromise through expanding illegal settlements in sensitive parts of the occupied West Bank.

However, given Netanyahu's own inclinations against an Israeli military withdrawal in the West Bank that he says would pave the way for Hamas rule there, his party's recent move further to the right to embrace pro-settler and annexationist positions, the possible inclusion in a coalition of the Jewish Home party that is equally pro-settler and annexationist, and the fact that Lapid himself has set conditions the moderate Palestinian leadership under President Mahmoud Abbas rejects, one should not expect peace to break out as an immediate consequence of this election.

With Netanyahu's Likud-Beiteinu bloc dropping from forty-two to thirty-one Knesset seats and Lapid garnering nineteen seats, Lapid can now decide whether to join forces with Netanyahu or block him from forming the next government and force another round of elections.

This Israeli campaign, including that by Lapid, was notable mostly for what it did not emphasize. For the first time in decades, the question of Israel's relations with its Arab neighbors was not at the fore and the battle was not primarily between dovish leftists and hardline rightists. Instead, the fighting was done within the right-wing and center-left camps. To the end, Netanyahu mistakenly focused his efforts on competing with Jewish Home, not paying enough attention to Lapid's ability to rally middle-class Israelis dismayed about issues such as the high cost of living, inadequate education, inability to buy affordable housing and resentful over longstanding draft exemptions for the ultra-Orthodox, something the premier perpetuated out of deference to his ultra-Orthodox coalition partners.

It was these issues, and not Netanyahu's hawkish policies such as rejecting Abbas's demands for a settlement freeze, that catapulted Lapid to primacy. Had voters wanted to punish Netanyahu for his lack of a peace policy, it would have been translated into a strong showing for the former foreign minister Tzipi Livni, who made renewing talks the only issue of her campaign. But her Hatnua party received only six Knesset seats.

The troubled showing of the joint list of Netanyahu and ultra-nationalist politician Avigdor Lieberman can be understood in part as stemming from a search by the public for new faces such as Lapid and the head of Jewish Home, Naftali Bennett, a former high-tech millionaire. Add to this the sense of an economic squeeze and resentment over the ultra-Orthodox taking from the state while not sharing the defense burden. While this has little to do with the Palestinians, it could affect them, depending on US policy, Lapid’s chosen direction and whether Abbas encourages the changes in Israel or opts for national unity with Hamas.

So what does Yesh Atid want? Clues may lie in its campaign video showing Lapid upside down and explaining that "everything is upside down" in Israel. By this he does not mean the Netanyahu policies that weaken Palestinian moderates like Abbas and strengthen the militant Hamas movement. He means the policies that squeeze the middle class while the ultra-Orthodox gain largesse from public coffers. In this he is harking back to his father, Yosef Lapid, who led the secularist and anti-ultra-Orthodox Shinui party as a coalition partner of Ariel Sharon; and to the social protest movement of 2011, when hundreds of thousands of Israelis took to the streets to protest the high cost of living and income inequalities.

The agenda could potentially clash with that of the settlers, something foreshadowed in a 2010 opinion piece Lapid wrote for the Israeli Ynet news agency. "Four percent of the country's residents can't decide they know what's right [for the country]," he wrote, adding that the settlers were undermining Israel’s global standing. He added that most Israelis do not want to live in a binational state, which would be the outcome of annexing the West Bank. Israelis within the country's pre-1967 borders were paying a price for the settlers in that spending on settlements "could have been used for education, health and building roads.”

Lapid mentioned Israel's policy towards the Palestinians only in passing after his victory, but what he did say appeared to reflect a lack of support for Netanyahu policies that arouse international approbation. "We are facing a world liable to ostracize us because of the deadlock in the peace process," AP quoted him as saying.

However, it remains to be seen whether he will insist upon his views, especially if Bennett is his partner in the coalition. And, even if he does, it is a question how much influence this will have with Netanyahu, who gave conditional agreement to the idea of a Palestinian state in 2009 but subsequently acted to thwart it. At present, Netanyahu is pushing the Palestinian Authority to the brink of collapse by witholding tax revenues Israel collects on the PA's behalf as a punishment for Abbas's successful bid for statehood status at the UN in November. During its primary elections in November, Likud moved further to the right, with young annexationists such as MP Danny Danon gaining primacy and veteran moderates like Dan Meridor being ousted. Indeed, it is possible that Netanyahu will not make any changes beyond the cosmetic and that this would put Lapid on the spot to decide if he was serious when he said he will only sit in a government committed to a peace process.

Much will depend on Washington's attitude. In his 2010 article, Lapid voiced concerns that the Netanyahu government was alienating Washington for the sake of the settlers. If the United States were to make abundantly clear its opposition to settlement expansion and its commitment to a genuine negotiating process leading to a two-state compromise solution, Israel's new kingmaker would be hard pressed to remain indifferent.

Ben Lynfield writes from the Middle East for the Scotsman and other publications.

Image: Flickr/The Israel Project. CC BY-SA 2.0.