The second government of Israeli Prime Minister Benjamin Netanyahu is centered on the Likud's partnership with Labor party leader Ehud Barak. This new and seemingly unlikely collaboration between rivals Netanyahu and Barak was born out of their mutual recognition that, regarding the two major challenges facing Israel, they think alike.

They both believe that the old concepts of the peace process will lead them nowhere and that any supposed progress with the Palestinians in the West Bank will only render Israel's security more precarious. Neither sees any sense in negotiating on the core Palestinian issues when there is no partner on the Palestinian side who can "deliver" security and law and order.

The second major challenge on which they agree is the nuclearization of Iran. Netanyahu sees that problem differently from his predecessor, Ehud Olmert. He is not likely to proceed under the old assumption that Iran's nukes are the world's problem and Israel should not be the leader in dealing with them. In order to shoulder that heavy burden, Netanyahu said clearly before the elections that he would seek a unity government, preferably with the Labor party. Barak was also quite clear on this issue.

The main problem the Netanyahu-Barak government will face is the hostile political environment surrounding Israel these days. The Netanyahu and Barak perception of the Palestinian and Iranian situations is widely shared by the Israeli public. In contrast, the "world" is clearly going in the opposite direction: as Israelis find themselves in great strategic peril because of a so-called peace process that handed over territorial bases to Islamic Jihad, the international community seems to side more and more with the Palestinians. And as the Iranians move ever closer to nuclear weapons, the world seems to be friendlier and more accommodating toward Tehran's leaders while at the same time becoming indifferent to Israel's fortunes.

Netanyahu sees a clear linkage between the two issues of peace with the Palestinians and Iran's developing hegemony over the region. When asked a couple of days before elections if he was going to draw a connection between the issues in his dealings with US President Barack Obama, his answer was, "I don't have to draw this linkage because the linkage exists right there on its own." In Netanyahu's view, the Iranians have practically kidnapped the Palestinian problem, if not the Palestinian people themselves, and Tehran exploits that problem toward its own ends. The surprise is that world public opinion is happy with this and actually cheers Hamas and its Iranian patron as they fight Israel.

These two genocidal forces have lately found a new occupant in the White House who seems to be adopting a policy of appeasement while glorifying defeatism in the form of a new climate of openness toward America's opponents.

There is no doubt that Obama is ready at any moment to engage Hamas; technically the only thing he has to do is plug the Oval Office into an already existing channel with Hamas. The man who has led the United States' engagement of Hamas and occasionally the Syrians is Rob Malley, who is close to both the president and Secretary of State Hillary Clinton. He is also the professed enemy of Ehud Barak; he is the source of the legendary canard that Barak was to blame for the failure of the Camp David summit with Palestinian leader Yasser Arafat in July 2000.

Thus it appears that Barak and Netanyahu will face an adversarial team in the new US administration. Lately, Wall Street Journal commentator Bret Stephens predicted in an interview to Haaretz that while Obama was not likely to completely reverse US-Israeli relations, he very well might shift them at least 90 degrees. This would mean not just America turning its back on Israel but also very scary results for Palestinian President Mahmoud Abbas faction of moderate Palestinians. I have heard from Palestinian sources that they are not happy with the prospect of being forsaken and left to the mercy of fundamentalist Islamists.

On the other hand, there is no sense in America pressuring Netanyahu to seek a political goal that is plainly unattainable under current conditions. So Netanyahu has the advantage of proposing a way out of the impasse by offering to negotiate limited but attainable goals. The Likud coalition agreement with Barak hints that Israel may pursue some sort of regional peace convocation; the Madrid conference of 1991 in which Netanyahu himself participated comes to mind.

As for Gaza - what Netanyahu calls "Hamastan" - Barak's presence in the government ensures that a major operation to uproot Hamas will not be launched. But there will definitely be a more activist approach of striking at Hamas' capabilities. And the war against arms smuggling into Gaza will take priority, as we saw recently in the Israeli bombing of trucks driving through Sudan toward Gaza.

The main challenge for Netanyahu will be the extent to which he is able to change Obama's mindset regarding the need to neutralize Iran as both a threat to all players in the region and a key obstacle on the road to peace with the Palestinians.