Israel's Prime Minister Benjamin Netanyahu addresses the Conference Of Presidents of Major American Jewish Organizations in Jerusalem on February 11, 2013.

Israel's Prime Minister Benjamin Netanyahu addresses the Conference Of Presidents of Major American Jewish Organizations in Jerusalem on February 11, 2013. Photo: Reuters

Israel's President Shimon Peres has commissioned Prime Minister Benjamin Netanyahu to form a new government after last month's parliamentary election. However, Netanyahu is in a tight corner. Many Israelis are disillusioned with him, the Palestinians in the occupied territories detest him, neighbouring Arab states find it increasingly difficult to deal with him, and many of Israel's Western supporters have found him too hawkish for the good of Israel. President Barack Obama is now well positioned to press him for a viable resolution of the Palestinian problem.

In the parliamentary elections, Netanyahu was outpaced by several centre-left parties, led by the newly formed Yesh Atid (There is a Future). About half of Israeli voters rejected his hardline policies and fixation on such foreign policy issues as the Iranian nuclear program at the cost of addressing mounting social and economic problems at home.

His Likud-Beitenu party won the largest number of seats, but nonetheless only 31 of the 120 parliamentary or Knesset seats. He now has to form a government with the support of either smaller ultra-conservative religious parties or, if possible, some of the centre-leftist groups. Whatever the outcome, he is unlikely to have a parliamentary majority as relatively stable as he did in the previous Knesset that enabled him to run full term.

On the external front, he has not done well either. He has lurched from one policy blunder to another. His policies of expanding Israeli settlements in East Jerusalem and the West Bank, and refusing to negotiate with the Palestinians on the basis of the principle of ''land for peace'', have backfired. They have boosted the Palestinian cause in light of the stalled peace process and no progress towards the internationally backed ''two state'' solution to the Israeli-Palestinian dispute.

The UN General Assembly voted overwhelmingly last November to elevate Palestine's status to that of non-member, signalling the international community's growing frustration with Israel. Netanyahu's retaliatory approval of more settlements to further tighten Israel's grip on the occupied Palestinian lands could only invite more universal condemnation. The latest body to castigate Israel for its settlement activities and brutal treatment of the Palestinians is the UN Human Rights Council.

While making too much of Israel's opposition to Islamist Hamas, which has been in control of the Gaza Strip since 2007, as a ''terrorist organisation'', Netanyahu's anti-Hamas measures have only helped to boost the movement's position domestically and regionally. He ordered a massive military attack on Gaza just before the UN vote but to little or no effect. Under international pressure, he had to agree to a ceasefire brokered by Egypt's new Islamist President Mohammed Mursi and then US secretary of state Hillary Clinton, enabling Hamas to claim victory, with wider regional and international recognition.

He seems perplexed by the popular uprisings in the Arab countries surrounding Israel, but has not been able to abandon his old ways in order to deal constructively with the new realities in the region. He has been beating the drum of a military assault on Iranian nuclear installations for a long time, but has found his military options very limited unless the US joins forces with him. Yet, Obama has refused to go along with Netanyahu's assertions that Iran is about to produce nuclear weapons.

Obama knows that the Iranian Islamic regime has not made a decision about achieving a military nuclear capability. He believes that stern Western sanctions are most likely to prompt Tehran to opt for a negotiated settlement. Obama's position is backed by several serving and retired senior Israeli intelligence and military officers, who have warned Netanyahu against a military attack on Iran.

The sanctions are indeed biting deep, causing much hardship for ordinary Iranians. The Iranian leadership may well settle for a diplomatic resolution, provided that it is given an acceptable face-saving measure, as the founder of the Islamic regime, Ayatollah Khomeini, did by accepting a ceasefire in the war with Iraq (1980-1988).

Israel no longer enjoys the good relations it had with Russia until recently. Its bombing last month of targets in Syria brought stiff Russian condemnation. Given China's common strategic interests with Russia over Syria, one could expect Beijing also not to be happy with the Israeli actions.

During the first Obama administration, Netanyahu was able to stonewall several of the President's attempts to kick-start the stalled Israeli-Palestinian negotiations and secure a final settlement. But he is no longer in a strong position. If Obama wants a resolution of the Palestinian problem and improvement in America's standing in the Arab/Muslim world, the time has come.

The new Secretary of State John Kerry and the nominated Secretary of Defence Chuck Hagel share Obama's vision and could be enormously helpful in this regard. The Syrian crisis is very tragic and requires urgent solution. But it is important to be reminded that the plight of the Palestinian people has gone on for too long. The US now can and should play a central role to address both issues, but in ways which would be complementary to one another.

Amin Saikal is professor of political science and director of the Centre for Arab and Islamic Studies (the Middle East and Central Asia) at the Australian National University