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The big problem has been that either side has not been willing to make enough concessions. Although currently we are close *ish* but having a right wing government formed in Israel is going to make things more difficult, no? That's a pressing matter, no?
Hamas: "We accept a state in the '67 borders," said Hamad. "We are not talking about the destruction of Israel." -Associated Press
Ahmadinejad: "If they [the Palestinians] want to keep the Zionists, they can stay ... Whatever the people decide, we will respect it. I mean, it's very much in correspondence with our proposal to allow Palestinian people to decide through free referendums." The Guardian
I'm not saying it's all Israel, but I'm putting the evidence there for all to see - we are getting close to a two state solution! Hamas announced this AFTER the conflict this January. The WORST thing is to get a right wing government in that will refuse to open a dialogue (in a reaction similar to stargalaxy: "They are terrorists, they are not humans, they must be put down". Because if the two sides cannot talk, they can only fight.
Kadima, Likud and Yisrael Beiteinu with Netanyahu the head of Likud taking the prime-minister's position.
http://news.bbc.co.uk/1/hi/world/7898749.stm
In that way it looks like it will be quite similar to the current government, and whilst there may be no enlightened foreign policy changes, it seems the Kadima front may be able to stop any xenophobic moves.
It will be interesting to see how the coalition plays out in the first few months especially with regard to the Gaza/Israel situation. On a similar note, has anyone noticed Barack Obama has gone awfully quiet recently? Not about Gaza, but just in general... there was a huge celebration when he went in and then he promptly made moves to close guantanamo and now nothing lol.