In a normal time, in a normal country, Benjamin Netanyahu would be a political giant.

He is already the second-longest serving prime minister in Israel’s history. Next week, when the country goes to the polls, he is likely to win a third spell in office. He has presided over an economic renaissance in Israel, during which the country has become a byword for high-tech flair. At a time when the world economy has been in turmoil, Israel has kept growing strongly.

Not a single Israeli has been killed by suicide bombing during Mr Netanyahu’s most recent period as prime minister, from 2009-2012 – compared with an average of more than 100 a year during the first years of the millennium. Israel has avoided major military engagements. The recent bombing of Gaza was (by Israeli standards) a relatively limited engagement.

Mr Netanyahu can also claim to have negotiated a very difficult international environment with considerable tactical acumen. Many predicted that turmoil in the Arab world would spark an uprising among the Palestinians. So far, it has not happened. Israel is watching developments in Syria and Egypt with real nervousness – but, so far, its own national security is unaffected. The Israeli prime minister has also played a key role in cajoling the world towards ever-tougher sanctions on Iran.

Mr Netanyahu has even defied the president of the US – apparently, without any real cost. When Barack Obama took office in 2009, his administration demanded a halt to Israeli settlements in the occupied Palestinian territories. However, Mr Netanyahu and his government kept building. In the end, it was Mr Obama who blinked. Given all this, it is easy to understand why the Israeli election on January 22 is likely to result in Mr Netanyahu’s re-election.

Three spells as national leader would normally guarantee a politician an honoured place in their nation’s history books.

But instead, there is a strong chance that future generations will look back on Mr Netanyahu as a man who fatally undermined the Jewish state – by failing to answer the big questions about its future.

The biggest question of all is the future of the Palestinians. It is a shock to realise that Israel has now been in occupation of the West Bank for almost 50 years – since the six-day war of 1967. It must be tempting for Israelis to believe that this situation can last forever.

It cannot.

Although life is relatively sweet for Israelis at the moment, their international environment is deteriorating fast. Israel used to have decent relations with the two most important governments in the region – Egypt’s and Turkey’s. But the two countries are now run by governments that are, to differing degrees, Islamist, and they are much less willing to accept Israel’s continued dominion over the Palestinians.

Israel is also losing support in the west. Israelis were justifiably stunned by the almost total lack of European support for their position at the recent UN vote on Palestinian statehood. Even the Germans, usually steadfast in support for the Jewish state, refused to back Israel.

The Israelis take comfort that US support is still rock-solid. But is it? Mr Obama’s nomination of Chuck Hagel to be US defence secretary sends a powerful signal. Mr Hagel has attracted the anger of the Israel lobby for stating the obvious – that the interests of Israel and the US are not one and the same.

Mr Netanyahu’s one gesture towards the Obama administration is to pay lip service towards the idea of a two-state solution. However, his actions suggest he has little genuine interest in the idea.

Settlements continue to be built and the Israeli government has humiliated and undermined the moderate Palestinian leadership on the West Bank.

The truth is that Mr Netanyahu has no long-term strategy for the occupied territories – or, at least, none that he can admit to publicly. That has opened a gap for him to be outflanked from the far right. The rising force in the Israeli election is the Jewish Home party, which is demanding the formal annexation of the 60 per cent of the West Bank that contains the vast majority of Israeli settlements.

This plan would grant Israeli citizenship to between 50,000 and

100,000 Palestinians who live in the annexed areas. It would confine the remaining millions to a rump area, where they would exist without statehood or political rights.

Such a proposal would extinguish Palestinian hopes of statehood and turn the remnant of the West Bank into a pathetic Bantustan. Illegal annexation would destroy Israel’s remaining international legitimacy – and probably incite a third Palestinian uprising.

Yet the fantasy of annexation is not confined to the Jewish Home party. It is also gaining strength within Mr Netanyahu’s own Likud party. As Daniel Levy of the European Council on Foreign Relations

says: “The most striking feature of this Israeli election is the growing strength of openly annexationist rightwing forces.”

Mr Netanyahu is not openly annexationist. But his support for continued settlement and his failure to engage with Palestinian moderates seems tacitly to aspire to the same aim – while avoiding open confrontation with the outside world by continuing with his empty commitment to a two-state solution.

Such a policy is tactically astute – but offers no strategic vision.

Mr Netanyahu may be returned to office in triumph next week. But he risks leading Israel to disaster.