The optimists in the Middle East, and they hardly exceed the number of fingers on one's hand, are wondering whether Benjamin Netanyahu, who may be charged of forming the new Israeli government, will pull a Richard Nixon out of his bag. After all, it was this former conservative American president who paved the way for establishing diplomatic relations with Communist China when he visited there in 1972.

After all, it was the Likud Party, led by the late Menachem Begin and now by Netanyahu, which had led the first Israeli government, in a precedent-setting gesture when it agreed to evacuate Jewish colonists from the Israeli-occupied Sinai Peninsula after signing a peace agreement with Egypt 30 years ago this month.

But the pessimists by far outnumber the optimists at this stage. Israel is struggling to form a new government after its indecisive election which empowered rightist groups but failed to give either political party a clear mandate for the next step in Arab-Israeli relations.

The likely formation of a coalition government, a prescription for continued infighting, may ultimately lead to another national election in the not too distant future. In short, the result has virtually nixed the "peace process", now on its last legs.

There were early expectations that the top-ranking Kadima party of Tzipi Livni, which only has one seat more than its arch-rival Likud, can find partners from the other smaller but ultra-rightist parties to lead the country, but that now seems to be almost an impossible goal.

Even if the two leading parties can miraculously manage to share responsibilities within a unity government, the conflicting positions of both Kadima and Likud are bound to cripple the peace process. And even if Livni decides not to join hands with Netanyahu, the survival of Kadima as a leading bloc is doubtful.

One wonders why the outgoing Israeli troika of Prime Minister Ehud Olmert, Foreign Minister Livni and Defence Minister Ehud Barack has not come out much earlier with their conditions for a settlement when their goals now seem not much different from the position of Hamas vis-a-vis the situation in the Gaza Strip.

It must be Israel's failure to oust Hamas from the coastal region, coupled with the international condemnation of the carnage that the Israeli war machine left behind in the densely populated region that gave birth to the troika's second thoughts.

Olmert threw a monkey wrench into the near-agreement reached under Egyptian auspices this week when he insisted that no truce would be reached in Gaza until an agreement has been set for the release of Gilad Shalit, the Israeli soldier who was abducted in 2006.

But all along Hamas had offered a two-pronged solution: Lift the Israeli blockade against the Gaza Strip and the rocket barrage into Israel would stop, and the Israeli soldier will be freed if some of the Palestinian prisoners in Israeli jails are released.

It is unbelievable that the Israeli leadership could not find anyone to help them work out such an accord which would have saved many lives.

While the Israelis - and the world - are watching the jockeying among Israeli politicians, the Olmert regime has unabashedly yet sneakily approved plans to expand a West Bank colony, called Erfat, where up to 2,500 homes will be built over a rocky hill about 400 acres in size. This came at a time when Olmert declared he was ready to pull out of the occupied Palestinian territory.

The Israeli usurpation of Palestinian property came on the heels of a hearing last week on Gaza at the Subcommittee on Middle East and South Asia of the House Committee on Foreign Affairs, where Dr Ziad Asali, president of the American Task Force on Palestine, underlined that the Israeli "settlements [colonies] entrench the occupation and are the most pressing political and logistical impediment to peace."

Haaretz, the Israeli daily, noted the discrepancy in the Israeli position. It said the Olmert government was elected "on the basis of its promise to advance a 'realignment' in the West Bank, at the centre of which stood the evacuation of dozens of settlements [colonies], but it concludes its terms without having upheld one of the commitments its predecessor made to the US administration - the promise to dismantle all outposts built since March 2001."

How will President Barack Obama and his special envoy to the Middle East, George Mitchell, who has previously scorned the enterprise of Israeli colonies, react to this Israeli puzzle? The Palestinians and all the world will be eagerly watching.