After Tuesday’s confusing elections in Israel, one thing is clear: Right-wing parties now have a commanding majority of the seats in Israel’s parliament. This puts the conservative former prime minister Benyamin “Bibi” Netanyahu in the driver’s seat–despite the fact that his Likud party, the leading right-of-center party, came in second to the leading left-of-center party.

Pay attention, because a lot is riding–for Israel and for America–on what happens next. Basically, Israel faces a choice between a unity government and a government of right-wing parties, and the choice could be up to Bibi. A unity government would mean sharing power at the top with current foreign minister Tzipi Livni and her Kadima party (the aforementioned leading left-of-center party). That might not be so much fun for Bibi. But a right-wing government with Bibi firmly in control might not be much fun for anybody; Bibi aspires to be a Great Israeli, and may yet prove to be one, but this could be a time for modesty and limited goals–in Jerusalem and in Washington.

Bibi refuses to share the prime minister’s seat with Livni on a rotating basis, and has instead offered Kadima the two most valuable portfolios–foreign and defense. Livni and Bibi could both dig in their heels, but Israeli president Shimon Peres will hopefully nudge them toward compromise. That would be a worthy gift to Israel and its friends, leaving the Israeli government in a strong position to confront two major threats, Hamas and Iran.

Bibi campaigned on a promise of crushing Hamas: “A government under my leadership will overthrow the Hamas rule in Gaza and bring about a cessation of rocket fire.” Sounds nice, doesn’t it? But there are two problems. First, the Israeli public has no desire to unleash the violence that would be necessary to destroy Hamas; second, nobody, least of all Israel’s military, wants to see the reimposition of military government on 1.4 million Palestinians in Gaza. There may indeed be no choice in the end except to destroy Hamas, but it is far better for Hamas to prove that to a unity government than for Bibi to try to prove it himself.

Even more important is the question of Iran. According to Eran Lerman, a prominent Israeli analyst, “the preference for every Israeli decision-maker will be to operate in close coordination with the U.S. and its western allies in bringing robust measures to bear on the Iranian nuclear program. Netanyahu has reason to think that this will be facilitated if he presides over a broad-based government.”

Indeed he has. Netanyahu will need cover from the Obama administration for any policy of crushing Hamas and confronting Iran–and the Democrats have never liked him. Former U.S. envoy to the Middle East Dennis Ross remembers a sense of “collective dread” within the Clinton administration when Bibi became the Israeli prime minister in 1996, because the Clinton team “would now be dealing with people who did not see the Palestinians as partners and who still could not publicly accept the principle of land for peace.” Clinton officials faulted Bibi for responding only to immediate political pressures, and for his perceived lack of long-range thinking. At one point Secretary of State Madeleine Albright and National Security Advisor Sandy Berger were even ready to declare publicly that they could not work with him.

For the Clinton administration, a collective sigh of relief replaced collective dread when Labor leader Ehud Barak was elected prime minister in May 1999. But just a year later, Arafat rejected Clinton’s peace deal at Camp David, proving that an unreformed Fatah could not be a partner for peace. Bibi had been right after all. Months later, the so-called Second Intifada–a systematic campaign of terrorist attacks inside Israel–proved that the land-for-peace formula was illogical, if not suicidal, when executed in that order. Once again, Bibi had been right. The Oslo peace process came crashing down, not because of Bibi, but because of its own fatally flawed premises. It was that failure of liberal policies–in Israel and in Washington–that eventually pushed the Israeli electorate to the right.

Hamas supporters were still dancing for joy at the hundreds of Israeli civilians killed in suicide bombings in Jerusalem, Tel Aviv, and throughout Israel when, in April 2001, rocket fire from the Gaza strip began–and never stopped. In the three years since Israel’s complete withdrawal from Gaza, the rocket and mortar fire has risen dramatically. There were nearly 1,000 hits inside Israel in 2006, about 1,700 in 2007, and more than 3,000 in 2008 (despite a six-month “ceasefire” in the last year). All the rockets were intentionally targeted at Israeli civilians. By the time a shipment of powerful Soviet-designed “Grad” rockets made its way through the tunnels into Gaza at the end of November 2008 and Hamas accelerated its fire, Israelis were clamoring for a response.

Hamas laughably offered to renew the ceasefire if Israel opened the border into Gaza. Besides the fact that “ceasefire” in Hamas-speak means a reduction in the rockets fired at Israeli civilians, Hamas’s demands are a denial of history. The Hamas rocket fire started just months after Yasser Arafat scuttled the peace process at Camp David, and its escalations have almost invariably preceded Israeli security measures. It is ridiculous for Hamas to deny this: Their entire strategy–the strategy Yasser Arafat brought to Palestine 50 years ago–has always been to provoke Israel into security measures that hurt the Palestinian population so they can build support for their “resistance.” Israelis understand this game–they’ve lived it for decades–so it would be political suicide for any Israeli government to cave in to Hamas’s demands.

Thus the dilemma facing the Israeli government last November: The public demanded action, but would abide neither the reoccupation of Gaza nor a surrender to Hamas’s demands. This left only one possible policy goal, namely to manage an indefinite conflict by suppressing the rocket fire, which in turn meant deterring Hamas. Hence Tzipi Livni’s explanation of Israeli war aims in the final days of the Gaza operation: We want to show them that Israel “has gone insane.”

The government prepared a series of options, starting with a massive campaign of precision air strikes, followed by a single reinforced division’s invading Gaza with the initial mission of punishing Hamas. If that proved insufficient, another division would be introduced, and then another, in an attempt to discover whether any level of force could bring Hamas to heel. In the end, diminishing returns on the field of battle, a growing mountain of civilian casualties, and Obama’s looming inauguration forced Israel to halt operations and withdraw its forces–under rocket fire.

Predictably, Netanyahu went from supporting the operation to charging that it hadn’t gone far enough. But the startling fact of the Gaza operation is that Hamas had to survive in order for the strategy to work. One prominent Israeli says, tongue in cheek, “The IDF was quite careful not to destroy them inadvertently.” Prof. Dan Sheuftan of Haifa University explains why: For Israel to deter Hamas, Hamas must be left with something to lose. Moreover, since 2006 Hamas has been caught in the vise of a dilemma between governing Gaza and “resisting” Israel. Overthrowing Hamas would in practice free it from the responsibility of governance and allow it to concentrate on terrorism. Right now, the political reality of governance places real constraints on Hamas; even with the flood of “humanitarian assistance” into Gaza, it still has to deliver for its people. In the recent conflict, it found itself isolated in the Arab world and largely cut off from its allies in Iran and Hezbollah. Perhaps the Gaza operation was successful. Perhaps Hamas can be deterred.

Ephraim Halevy, former head of Mossad, the Israeli intelligence agency, goes even further. He argued recently in The New Republic that “Israel, the United States, and Egypt should use the victory to work with Hamas and try to bring it, under certain conditions, into the political fold.” Menachem Froman, rabbi of a West Bank settlement, sounds a similarly magnanimous tone: “Can we change Hamas’s hostile stance? From years’ experience dealing with Hamas leaders and their ideology, I can say there is such a chance and we should try.”

Conservatives in Israel and in the U.S. react to such talk with . . . well, collective dread. Negotiating with an unreformed Hamas implies trying to sow a new “peace process” in the same sand as Oslo. Once again, Israel will be dealing with Palestinians who are not real peace partners and putting faith in a land-for-peace scheme that has already shown a tendency to become land-for-terrorism. The ex-Soviet dissident Natan Sharansky resigned from the Sharon government over the 2005 Gaza disengagement because he believed that “any concessions in the peace process must be linked to democratic reforms within Palestinian society,” without which, he predicted, disengagement would “exacerbate the conflict with the Palestinians, increase terrorism, and dim the prospects of forging a genuine peace.” He, too, has been proven right. As one Israeli writer told me, “the peace process nearly destroyed this country.”

But, as during the Cold War, perhaps the key obstacle to Arab-Israeli peace is neither Arab nor Israeli. Iran now looms as the greatest threat to the region. Israel has recently fought two proxy wars against Iran–with Hezbollah in 2006 and with Hamas in the past weeks. The next confrontation may be more direct. The remaining window for dissuading (or preventing) Iran’s attainment of threshold nuclear-weapon capability is almost certainly now a matter of months, not years.

If an Israeli unity government concludes there is no choice but to confront the threat from Hamas and Iran decisively, its policy will likely have the backing of the Israeli people, the Obama administration, and even (privately, at least) most Arab governments. If instead a right-wing Israeli government attempts to eradicate Hamas or confront Iran while there is still some possibility that deterrence will work, support for the policy could fracture everywhere, weakening Israel’s hand at a critical moment and strengthening its enemies in the end.

Part of what brought Netanyahu back from the political graveyard is that the last ten years proved him right on some of the major flaws of the “peace process.” Obama’s team should bear that in mind as it gets ready to spend four years chasing the dream of a two-state solution while the Palestinians don’t have civil institutions necessary to sustain a state of any kind.

In the meantime, Netanyahu has hopefully learned to fear the sirens of the Middle East, which lead even the wisest and most powerful to give up what they can get in exchange for what they can’t. – Mario Loyola, a former adviser in the U.S. Senate and at the Pentagon, has been a frequent contributor to National Review.