Israeli voters have a wonderful knack of springing surprises that the people they elect only rarely match. While opinion polls suggested the country was veering even further to the right than Benjamin Netanyahu’s outgoing coalition of nationalist, religious and colonist parties, a newly-minted movement of the centre headed by a telegenic former news anchor charged up the middle and gave the seemingly unassailable prime minister a bloody nose, if not a knockout blow.

It was only last May that Netanyahu was being hailed as the ‘king of Israel’ by Time magazine. Now, at the head of the largest but much diminished party in the Knesset, it looks as though he will have to find coalition partners from the political centre rather than among his ideological soulmates on the irredentist right. Enough Israelis still believe Netanyahu is their most plausible prime minister, but they have clipped his wings.

Partly that is because his government was insufficiently responsive to the vast demonstrations of the summer of 2011, in which the young, secular middle class — Israel’s squeezed middle — called for the state to renew its traditional emphasis on social justice, with affordable housing, better education and more equitable taxes. Some voters may also have feared that Netanyahu’s belligerence — towards Iran and through his continuing colonisation of Palestinian land in the West Bank and occupied east Jerusalem — has become so alienating to US President Barack Obama and to European leaders that he risks isolating Israel internationally.

Similar sentiments saw Yitzhak Shamir defeated by Yitzhak Rabin in 1992 and helped end Netanyahu’s previous premiership in 1996-99. And it would have been odd if an electorate that still, by a narrow majority, favoured a two-state solution with an independent Palestine, had given a ringing endorsement to a man who had worked so hard to frustrate it.

Yet there is little reason to imagine this election will rekindle the quest for peace. First, in a landscape of small parties dominated by big egos, Netanyahu, who heads the biggest of them, does not do chastened. Second, the relative revival of the centre and centre-left was fuelled mostly by domestic concerns. Third, Netanyahu may have had a personal setback, but the annexationist right has never been stronger in the Israeli Knesset.

The prime minister’s decision to merge his Likud party with the far right Yisrael Beiteinu fused uncompromising nationalism with the Greater Israel ambitions of the settler movement. But the Likud primaries had already demonstrated that the flagship of the right had been seized by hardliners, who threw any waverers overboard.

And then there is the Jewish Home party — a substantial force even if it did not do as well as polls predicted — which wants Israel to annex most of the West Bank.

Any lingering vision of a Palestinian state alongside Israel — the declared policy of the international community to which both parties have signed up — is still a mirage. Netanyahu’s revival of plans to expand colonies east and south of occupied Jerusalem places a viable Palestinian state beyond reach.

Furthermore, Israel’s financial reprisals in the wake of the UN general assembly’s November vote to upgrade Palestine to a non-member state could hasten the demise of the increasingly discredited Palestinian National Authority, and accelerate the reconciliation of the nationalist Fatah, which runs it, with Hamas, the Islamist rulers of Gaza.

Hamas has gathered strength from the success of allies in the Muslim Brotherhood, such as President Mohammad Mursi of Egypt, as a result of the Arab Spring, and has a visible spring in its step after its last, inconclusive fighting with Israel in November. At the same time, grassroots Palestinian movements are adopting new tactics copied from Israeli colonisers, such as setting up Palestinian camps on occupied land.

If the avenues to a separate state continue to be closed off, some Palestinian strategists believe these tactics could develop into an apartheid-style struggle for equal rights within a single state — a nightmare for Israel that would inevitably tarnish its legitimacy.

There is talk of measures that might change this equation, such as Obama and the EU setting out the parameters of a two-states deal, and a deadline to reach it. So far, it is just talk.