Israel: settlements and setting accounts

The entry of far-right nationalist leader Avigdor Lieberman and his party Yisra'el beitenu ("Israel our home") into the Israeli government is being hailed as controversial, at best.

Haaretz, which has traditionally a leftist leaning, launches a frontal attack against Labour party leader (and current minister of Defence) Amir Peretz in an editorial entitled What is left of Amir Peretz?, asking what is the point in sitting in the same cabinet with the far right. The editorial contends that Peretz was not able to implement his social agenda, especially as he accepted a chair he was not fit for.

During his half year in power, he betrayed his public mission by not taking over a socioeconomic ministry. Instead, he opted for the Defense Ministry, an area in which he never showed any interest or had any involvement in the past. This is also an area in which his ability to influence proved minute, if not downright negative.
Had he agreed to pass up the honor inherent in this position and stuck to promoting the issues for which he was elected, he could, with his talent and experience, have exerted an influence - as education minister or any economy-related minister - and would not have become a person whose opinions have no impact on the matters for which he is responsible.

Although some Labour MKs (members of parliament) are trying to oppose the cabinet reshuffle, most central committee members support the inclusion of Yisra'el Beitenu, even if that means that the political balance within the cabinet (where Lieberman is bound to serve as deputy prime minister) is way more right-wing on both diplomatic and socioeconomic issues.
Haaretz is particularly concerned by the possible repercussions on the peace process (if any process still exists):

With the inclusion of Lieberman, it is clear that any concessions in the West Bank have been forestalled. Negotiations with the Palestinians are also impossible, even if the Palestinians meet the most stringent preconditions, because a right-wing government has nothing to offer in such negotiations.

The early signals are not encouraging. Peretz has acknowledged the existence of several illegal "outposts" of Jewish settlers in the West Bank and the illegal urban development of many settlers' "new towns", and has announced that he does not intend to evacuate these illegal outposts in the near future.

An editorialist of Haaretz summarizes this story with an article entitled A Lethal Combination:

And indeed, by turning to Lieberman, Olmert is declaring that he does not have the strength to lead the country on his own, while Defense Minister Amir Peretz, for his part, is admitting that he does not have the political and emotional strength to fight back. This is a process that typically occurs among a defeated elite: In order to save itself, it tends to call in the bully for assistance. Olmert and Peretz know they have lost the public's confidence; they know that the recent Lebanon war, which was begun and conducted irresponsibly, was a major strategic failure. But government leaders refuse to recognize their responsibility and are breaking all the records for that familiar public cynicism and corruption.