Ahead of the Israeli elections next January, a merger between the parties of the prime minister, Binyamin Netanyahu, and the foreign minister, Avigdor Lieberman, has been announced. They are to contest the elections on a joint list, intending to become the largest bloc in the Knesset.

The move is seen as an achievement for both men. Netanyahu was shaken by the recent decline in the popularity of his Likud party at the rate of one seat per week. More specifically, his apprehension revolved around the possible return of Ehud Olmert, the former Israeli prime minister, as leader of an opposition alliance consisting of Tzipi Livni, the former foreign minister; Shaul Mofaz, leader of Kadima; and Yair Labed, a rising political star.

Netanyahu's avowed objective is to assemble a major political force that would guarantee his re-election and ensure his dominance of the Israeli right. Lieberman is the main beneficiary of this alliance: it guarantees power for his party, Yisrael Beiteinu, and under the agreement, Lieberman can choose to run whatever ministry he desires, including the important ministry of defence. He will gain political legitimacy and be transformed from a mere participant in a coalition government to a key player. If in recent years the government has been a construct of Netanyahu and Ehud Barak, the defence minister, the next government will be a Netanyahu-Lieberman one. Lieberman can also contest Likud's leadership after Netanyahu.

The alliance reflects a lunge to the right, at a time of greater extremism in Israeli politics. Previously, Lieberman was very much on the margins. When he became minister of transport, a minister in the Labour party resigned, refusing to sit at the same table with him.

After that, Lieberman became the foreign minister. Many thought this would provoke the ire of the international community. But he was warmly received in European capitals. If one had said 10 years ago that Lieberman would become foreign minister, one would have been accused of ignorance, if not of hostility and incitement against Israel.

Among the obvious outcomes of this new coalition is the fact that Likud has become more extremist, and Lieberman more influential and more dangerous. A few months ago Lieberman called for the toppling of President Mahmoud Abbas, despite the fact that the Palestinian leader has maintained the peace in the shadow of the occupation, and continues to pursue negotiations – even in the absence of an Israeli partner. Lieberman also called for economic, political and security sanctions on the Palestinian Authority after it began diplomatic moves to gain UN recognition for a Palestinian state.

Lieberman has espoused policies hostile to Arab citizens of Israel, who constitute 17% of the population. The slogan of his party is "No citizenship without loyalty"; he seeks to oblige Arabs citizens to declare loyalty to the Zionist state as a condition for citizenship, including the right to vote and become members of the Knesset. As the danger of racism depends not only on its callousness but on its power and influence, this coalition at the heart of government suggests a sharp rise in levels of racism and a dramatic decline in democracy.

Central to Lieberman's politics is official recognition for the annexation of Jerusalem and the illegal Jewish settlements, in exchange for the transfer of major Arab population centres in Israel to Palestine. Altogether, Lieberman's aim is to make the citizenship of Palestinian Arabs conditional and temporary. Ultimately, this could result in a pure Jewish state, free of Arab citizens.

When Jörg Haider and his extreme right party entered the Austrian government, several European countries imposed sanctions. Lieberman is far more dangerous than Haider. His stature is proof that extremism has come to dominate in Israel. Should the kind of politics that are rejected in Europe be accommodated in the Holy Land?

The last government and Knesset, whose term has just ended, was the most extremist so far; in the upcoming elections the situation is likely to change for the worse. So what should we do? I believe trying to persuade Netanyahu and his government to adopt more moderate policies is a waste of time and effort. The only way to ensure change is through pressure and sanctions on the Israeli government. Netanyahu's political conduct shows that he bows only when confronted. Whoever wants a just peace and to prevent looming wars, whoever wants to put an end to the crimes committed by occupation, whoever wants to combat racism, must help in imposing sanctions.