ANALYSIS: World waits for new Israeli government's first actions

Tel Aviv - Israeli Prime Minister Benjamin Netanyahu began his first day in office Wednesday with the eyes of the world fixed on him. Palestinian, Arab, American and European leaders were watching and waiting, closely and anxiously, to see the Netanyahu government's first actions with regard to peace negotiations, settlements, the Gaza Strip and, perhaps in the somewhat longer run, also Iran. The European Union's top diplomat, Javier Solana, warned from Brussels in mid-March the bloc would do 'business as usual' with the new Israeli government only if it continued working for a two-state solution to the Middle East conflict. US President Barack Obama, along with Secretary of State Hillary Rodham Clinton, has used every relevant opportunity since taking office in January to stress the two-state solution, telling a news conference in Washington last week this was 'critical' for his administration. Netanyahu tried to ease the concerns over the peace process when he presented his government late Tuesday, seven weeks after the bloc of right-wing parties headed by his Likud party won a parliamentary majority in Israeli elections. 'We will conduct continuous peace negotiations with the Palestinian Authority with the aim of reaching a final agreement,' he told the Knesset, Israel's parliament, shortly before it voted confidence in his government just before midnight. 'We don't want to rule over another people. We don't want to rule over the Palestinians. 'I say to the leaders of the Palestinian Authority: If you really want peace, peace can be achieved.' But, bearing in mind his hardline coalition partners and the right-wing majority in the Knesset, Netanyahu stopped short of meeting calls by the Palestinians and world leaders to openly express support for a Palestinian state. His government would not take any 'short-cuts' toward a peace deal, and focus greatly on economic and security cooperation with the Palestinians, although it would at the same time continue the political negotiations, he said. He called this a triple-track approach. 'Under the final (peace) agreement, the Palestinians will have all the powers needed to govern themselves, except for those which threaten the existence and security of the state of Israel,' Netanyahu said. Clarifying his position, an advisor, speaking on condition of anonymity, said Netanyahu supports the establishment of a state, some of whose sovereignties would be curtailed. For example, it would not be allowed to sign treaties with Israel's declared enemies that could pose a threat. Critics, however, have termed this 'autonomy plus, state minus.' Netanyahu has also vowed he will not negotiate Jerusalem, nor give up the strategic Jordan Valley - a large chunk of the West Bank along the border with Jordan through which the river Jordan snakes. The Palestinians want East Jerusalem as their capital. Israeli President Shimon Peres nevertheless said in talks with Czech officials in Prague this week he believed the Netanyahu government would respect the two-state solution, even if he is unable to declare so directly. Netanyahu, 59, has had to walk a tightrope to humour both his coalition partners to his right - such as the ultra-nationalist Israel Beiteinu, the pro-settler, far-right Jewish Home and the ultra-Orthodox Shas - and the Labour Party to his left. Labour Party leader Ehud Barak demanded a clause in the coalition agreement that calls for advancing regional peace, but has remained rather vague, even if it unequivocally states the cabinet's commitment to interim peace agreements signed by previous government. Foreign Minister Avigdor Lieberman, of Israel Beitenu, who has said he would be willing to vacate his settlement of Nokdim in return for real peace, but who also has many supporters in settlements. Many of Lieberman's supporters are secular immigrants from the former Soviet Union living in settlements, not so much for strong ideological reasons, but because of the cheap housing compared to crowded, congested and expensive Jerusalem. Then there is the Jewish Home, whose voters are vehement, ideological supporters of the settlement movement and of a 'Greater Israel' that includes also the West Bank and Gaza. The ultra-Orthodox Shas, strongly objects to concessions on Jerusalem, sacred to religious Jews. Netanyahu's coalition agreement with Lieberman is bad news for the radical Palestinian Islamist Hamas movement ruling Gaza. It declares the government will 'not negotiate with terrorists' and promises tough action against them. Clause 11 states: 'A strategic goal of the state of Israel will be to topple the Hamas government in Gaza.' Commentators have warned that it is only a matter of time before the 'second Gaza war,' the first being Israel's December 27 - January 18 Gaza offensive aimed at curbing rocket attacks from the strip. As for Iran, the Netanyahu government guidelines declare it will not tolerate Tehran's nuclear armament, leaving the world to wonder whether that will mean an Israeli strike. But the world has also noted that former premier Ariel Sharon was received as a hawk and warmonger, only to surprise everyone by unilaterally pulling Israeli troops and settlers from Gaza in 2005. Now, beyond Netanyahu's declarations - and those in his government guidelines and coalition agreements, the world says it wants acts, not words, and will judge his government accordingly.