Where is Israel Heading?

Neither the military operation in Gaza nor the elections that brought a right-wing government to power has fundamentally changed Israel's foreign policy agenda. What has changed is the apparent determination of the new US administration under Barack Obama to improve America's standing in the Muslim and Arab worlds. Given the centrality of good relations with the United States to Israeli security, Israel's most salient problem now is to avoid a serious clash with the United States as both countries, in their own - and different - ways, deal with the Palestinian and Iranian issues. Israel will have to walk a narrow tightrope until the end of 2009, doing things on the Palestinian front that it would prefer not to do and refraining from doing things with respect to Iran that it would rather do. However, its margin of maneuver is likely to broaden after that if Obama concludes that neither the Israeli-Palestinian peace process nor engagement with Iran is providing much return on his investment of time, effort and political capital.