On Friday, Yuval Diskin, chief of Israel's Shin Bet domestic intelligence agency until 2011, gave public voice to his concerns about the character of Israel's prime minister, Binyamin Netanyahu, who is expected to be comfortably re-elected in general elections on 22 January. "At play inside Netanyahu," Diskin complained, and not for the first time, "is a mix of ideology, a deep sense that he is a prince of a 'royal family' from the Jerusalem elite, alongside insecurity and a deep fear of taking responsibility." Netanyahu, he added pointedly, "has no strong core, no tough kernel about which you can say, 'Know what? In an extreme situation, in a crisis situation, I can follow him. I can trust him.'"

Diskin is not alone in being suspicious of what drives Bibi, as he is known. For despite his continuing popularity among large sections of Israel's electorate, Netanyahu, aged 63, remains someone whose real beliefs and motivations are somewhat opaque and whose authenticity – or otherwise – has long been debated.

He has been accused of being "manipulative", of "bending the rules" and of possessing a "self-belief" so strong that he struggles to comprehend how others could hold contradictory opinions. And how Netanyahu is viewed outside Israel and by Israelis is very different. If his reputation abroad is coloured by his desire to use force to dismantle the Iranian nuclear programme, by the tragedy of the recent conflict in Gaza, and the recent surge in settlement approvals, all occurring at a time when civil liberties in Israel itself have come under attack, his countrymen view him through an alternative prism.

Avishai Margalit, a philosophy professor and close friend of Netanyahu's war-hero brother, Yoni – killed in the raid on Entebbe to rescue 100 Israeli hostages in 1976 – has pondered this issue. "There has long been a question about Netanyahu, what is fake and what is real?

"I separate people into three categories," explained Margalit last week, before Diskin's intervention but, like the former intelligence chief, preoccupied with Bibi's "kernel". "There are people who are like onions with no core at all. Then there are people like avocados which are largely soft but with a core. Finally, there are olives which are harder and largely all core. Netanyahu is more of an avocado. Soft and a bit frightened."

If that is a surprising judgment on a man often criticised for his abrasive self-confidence who, reportedly, would like to bomb Iran, it is only one paradox in an often contradictory political psychology. For as Margalit admits, Netanyahu, who he has described as a "mythomaniac" prone to a sense of his own "grandeur", cleaves to extremely strongly held beliefs on issues that matter most to him.

The most significant figure in his political education, Margalit believes, was Netanyahu's father, Benzion, the Israeli historian and Greater Israel Zionist, who died last year never relinquishing the notion that the majority of Arabs – even Israeli Arabs – posed an existential threat to Israel. For the son, the notion of an Israel in perpetual danger is articulated in a twin set of convictions that no one doubts he holds: that Iran is an existential threat as serious to the Jewish people as Nazi Germany, and that Europe, in particular, fails to understand the threat facing it, too.

All that is packaged in a curious brand of conservatism. For while Bibi has been described as being a US neoconservative in the model of Dick Cheney on economic policy and on the unquestionable primacy of certain kinds of western political and cultural models, in other respects he is a small "c" conservative of a far older kind, anxious to avoid change and its risks.

This issue was taken up by Haaretz's editor-in-chief, Aluf Benn, writing a few days ago. "Netanyahu abhors risk and likes to present himself as a conservative. His campaign slogan – 'A strong prime minister' – is addressed to people who are happy with the situation and see no need for change."

Set against that, however, as Benn noted, is another appeal: to militarism. "Militarism," Benn added, "is what sets the centre apart from the left and the Arabs opposed to war, and that's the most important message of this election campaign."

As Benn points out, on his Facebook page Netanyahu has pictures of military jets, soldiers and of himself with Israel Defence Forces commanders. The tasks he has set himself on re-election are halting Iran's "nuclear programme" and building Israel's military while cutting government spending.

The question of the nature of Netanyahu's conservatism has been complicated by Israel's right-shifting political scene. Netanyahu's Likud party had something akin to its own Tea Party moment last autumn as Netanyahu faced a challenge from the right from his former chief of staff, Naftali Bennettcorrect, who has set up his own party. That, says Margalit, resulted in a Mitt Romneyesque moment in which the Israeli prime minister tacked hard to the right, not least over recent announcements regarding new settlement-building around Jerusalem. , that has left him struggling Netanyahu has since struggled to tack back – one of a number of strategic misclaculations during the campaign.

On the advice of his long-term US Republican campaign adviser, Arthur Finkelstein, who masterminded his first election in 1996, Netanyahu also bet heavily on the coalition he formed for the election with his ultra-nationalist former foreign minister, Avigdor Lieberman, who was then forced to stand down weeks before the election after being indicted on charges of misconduct in public office. The consequence of that, and of the surprise emergence of Bennett, is that the 45-odd seats Finkelstein promised Netanyahu he would win in the merger have shrunk in polling to 33. All this barely months after Netanyahu prosecuted a conflict with Gaza many believed had strengthened his hand.

Perhaps the answer is that the exigencies of Israel's politics have shaped Netanyahu as much as he has shaped the country's move to the right. Educated partly in the US, where he has lived at various times, Netanyahu did his military service in the elite Sayeret Matkal, the same unit his brother would be commanding at the time of his death in 1976. Returning from a job as a management consultant in Boston, his first job in Israel was heading an anti-terrorism institute set up in his brother's name. His rise within LikudParty, which he joined in 1988, was rapid: he was elected prime minister, the youngest in Israel's history, for the first time in 1996 following the assassination of Yitzhak Rabin a year before.

Although Netanyahu's first term in office would last only three years, coming to an end amid police allegations – never brought to court – of corruption and influence trading, the positions he took then have remained constant.

A vocal critic of the Oslo peace process, he opposed both any move to yield Arab districts of Jerusalem to a future Palestinian capital as well as a staged implementation of the peace process. Efraim Karsh, a revisionist Zionist historian who shares some of Netanyahu's concerns, explains his political rehabilitation as the result of a convergence with a decade-long disillusionment among Israeli voters with the peace process following the outbreak of the second intifada in 2000.

While he believes Netanyahu has not been given enough credit for bringing Likud to accept the two-state solution, – which Netanyahu endorsed in 2009 and recently recommitted himself to – he argues Bibi stands where the majority of Israelis do on the peace process.

"While most Israelis want a two-state solution, they recognise [as Netanyahu has argued] there is no Palestinian partner for peace and that he has no choice." On the domestic front, he has led one of the longest lasting and most stable coalitions in recent memory and steered economic growth in a period largely free from attacks launched from the West Bank. While Israelis might fret that they may be losing the argument internationally, it is a trade-off that, for now at least, they are prepared to accept.

It is an argument also made by psychologist Carlo Strenger, who has written a psychological profile of Israel. A liberal in favour of the two-state solution, while concerned about the health of Israeli democracy, he believes Netanyahu's popularity is the symptom of a growing "cognitive dissonance" in an electorate attached strongly to the notion they live in a democratic state yet prepared, as Strenger has argued, to "curtail democracy when it comes to Arabs and leftwing criticism of Israel".

"It is confusing," he told the Observer. "Even recent polls show the continuing trend. Two-thirds of Israelis support a two-state solution including the division of Jerusalem. But I think most Israelis are completely disillusioned with and allergic to the issue of the peace process. They don't want to hear about it. Part of that is because the left in Israel has not been able to answer a question – and that is how a Palestinian state on the West Bank based on the 1967 borders would be different to Gaza.

"Israelis say, – for heaven's sake! – we can't take that risk, so it is better to be in a holding pattern. They don't see Netanyahu as a raving ideological right winger but as a shrewd manager of a conflict." Strenger is certain: Netanyahu's small "c" conservatism and aversion to risk-taking would not apply to Iran if he had US support or sufficient military resources. "If he had the firepower and five carrier groups he'd finish Iran tomorrow. He is a small 'c' conservative out of necessity only."