Despite losing about a quarter of its seats in Tuesday's election, Prime Minister Benjamin Netanyahu's Likud-Yisrael Beiteinu will remain the largest faction in the next Knesset. And although he is weakened, Netanyahu will almost certainly retain the premiership. Nevertheless, in the days ahead, he will struggle to build a governing coalition -- the meteoric rise of Yesh Atid, the party led by the populist anchorman-turned-politician Yair Lapid, left the Knesset almost equally divided between a right-wing and a center-left bloc. The prime minister might have to opt for more centrist partners than he would normally prefer.

Such an outcome reflects the realities of Israel's political discourse: Netanyahu is no longer as popular as he once was, but the center-left has also failed to serve up a viable alternative. Whatever Netanyahu's shortcomings, under his stewardship Israel mostly avoided being swept into the global financial morass, and its security situation stabilized despite a deadlocked peace process. No center-left leader could claim those achievements. Labor's new head, Shelly Yachimovich, revitalized the party but not enough. The promising former head of Kadima, Tzipi Livni, who ran as the leader of a new party, had little to show for herself other than a series of failures in both the government and the opposition.

At the same time, the electorate is aware that the next government will have to face a series of challenges beyond its relations with the Palestinians, and most Israelis expressed doubts as to whether Netanyahu could handle them on his own because his administration failed to address these issues in the last few years. Israel is also facing serious decisions about its economic policies. The outgoing government could not agree on next year's budget, which will have to entail both far-reaching cuts in services as well as raises in taxes. The next government must also respond to increasing frustration about social and economic inequality. Similarly, it will need to make some difficult decisions concerning relations between the country's rising militant religious sector and its secular majority, which has grown uncomfortable with the radical demands of the ultra-Orthodox. And last, it should confront the increasing alienation of Israel's Arab citizens, almost 20 percent of the country's population, who increasingly boycott national elections.

In other words, although the outside world usually views Israel almost exclusively through the prism of Israeli-Palestinian relations and the peace process, the country's citizens have many other concerns. By bringing in some of the centrist parties into his coalition and leaving out extremist nationalist-religious groups, Netanyahu could appear to respond to these concerns and thus regain the credibility that he had recently lost and which brought about his party's significant electoral losses.

Even so, the peace process still matters, because the current stalemate is untenable. The question, however, is how to move forward. There is no doubt that the policies of the Netanyahu government have contributed to the gridlock, but so have Palestinian attempts to raise preconditions for the resumption of negotiations. The divide between the Palestinians in the West Bank and Gaza, meanwhile, has hurt the Palestinian Authority's claim to legitimacy and made negotiations even more difficult. All this helped to explain why Israelis in this election were less focused than usual on the Palestinian issue. 

But the experiences of the more dovish Israeli governments that preceded Netanyahu's illustrate even deeper obstacles to peace. In the late 2000s, under Ehud Olmert's center-left government, Israel negotiated with the Palestinian Authority for more than two years. Both sides entered talks with an honest interest in reaching a two-state solution. Had they been successful, Olmert might still be prime minister and Mahmoud Abbas, the president of the Palestinian Authority, would have a trump card to play against the more radical and fundamentalist Hamas. But as soon as negotiators moved from their ritualistic opening positions to the core issues of the conflict -- borders, the fate of the Jewish settlers in the West Bank, Jerusalem, the Palestinian refugee problem, and Israel's security concerns -- it became clear that the gaps between the most moderate Israeli positions and the most moderate Palestinian positions were too wide to be easily bridged.

That has not changed. In fact, there are now more Jewish settlers in the West Bank than there were fours years ago, which makes coming to an agreement thornier than it was during Olmert's time. And Hamas' continued control of the Gaza Strip means that even an agreement reached between Israel and the Palestinian Authority would not mean an end to the conflict. The current turmoil in the Arab world bodes ill for the peace process, as an Egypt ruled by the Muslim Brotherhood and a Syria embroiled in a bloody civil war do not encourage even moderate Israelis to take risks with the Palestinians.

All this means that Israel's next government should take a fresh look at what is feasible, with an eye toward the lessons from similar conflicts such as those in Cyprus, Bosnia, Kosovo, and Kashmir. Like the Palestinian-Israeli conflict, these disputes are multifaceted: They are not only about territory but also about sovereignty, legitimacy, and national self-determination; they have been exacerbated by religious differences; and they entail occupation, resistance to that occupation, and terrorism. None of these conflicts has been fully settled because the contending parties were not willing to give up their basic claims, but they have been gradually tempered. In each case, a complex set of partial agreements, conflict-management measures, unilateral decisions, and confidence-building strategies has generally kept bloodshed at bay. In Cyprus, Turkey's decision to open crossings in Nicosia, for example, helped to stabilize the situation, as did internationally supervised border agreements between Serbia and Kosovo. Similar partial agreements have achieved the same end in Bosnia and Kashmir, although the deeper issues have still not been resolved.

In none of these cases was the United States able to move the parties toward a final-status agreement against their will, but it could help coax them to accept halfway measures that do not entail giving up fundamental claims. Such proactive conflict management may be the only realistic prospect for peace between the Israelis and Palestinians. And it could be acceptable to a new Netanyahu government that will, in all probability, include centrist parties. Such an approach would mean moving ahead slowly, step by step, which would make it easier for both sides to sell such piecemeal progress to their constituencies, since they would not have to cross any of their fundamental and ideological redlines. Such a strategy would be based on what has already been achieved between Israel and the Palestinian Authority, including the much-overlooked fact that security cooperation between the two sides has improved in the last few years, despite the lack of progress on negotiations. Such an approach would entail Israel's tacit acceptance to refrain from expanding its settlement project (a step Israel agreed to in the past, even under the hawkish government of Ariel Sharon), easing life conditions for the Palestinians through economic concessions and the further dismantling of checkpoints in the area, and encouraging Palestinian institution building. On the Palestinian side, the agreement would require moderating its public diplomacy and improving its educational system, both of which are geared to be confrontational. This may also encourage strengthening the implicit cease-fire between Israel and Hamas, and although not much more could be achieved in Gaza given Hamas' rejection of Israel's very existence, it could encourage more moderate elements there if they see that cooperation pays off.

A key figure in this scheme would be Israel's next minister of defense, who, taking into account Netanyahu's weak position, will not likely be someone from Likud. Netanyahu will be under public pressure to appoint a person who could play the role of the responsible adult. This means that  the current minister of defense, Ehud Barak, will likely remain in his position. If Barak retains his seat, his presence will greatly reassure both Israelis and the international community that pragmatism and not ideology will prevail in Israel's new government. 

The conventional wisdom in the international community is that one can return to the Oslo process of 20 years ago. But up until now, that has not achieved its stated aim -- a two-state solution -- and will not be very helpful in moving the two sides toward more accommodation. The recent Israeli elections have not changed this, and more modest aims are the only realistic way to push Israeli-Palestinian relations away from the dangers of confrontation and toward some modicum of reconciliation. Everything else has already failed.