I don't just mean the ousting of the far-right Israeli Prime Minister Benjamin "Bibi" Netanyahu, pending ratification by the Knesset. Israel's longest serving premier, from 2009 to the present and 1996-1999 before that, Netanyahu had clung to power with Trump-like tenacity through four indecisive elections in two years - and seemed headed for a fifth before he was unable to put together a coalition with a majority of seats.

At the last moment, eight Israeli political parties from right, left and center - some with totally contradictory ideologies - managed to pull together a governing majority on Wednesday, united by their intense dislike of Netanyahu. The new prime minister will be Naftali Bennett, head of a small religious nationalist party, who styles himself as more right-wing than Bibi and opposes any Palestinian state.

So what has happened that could strongly affect Jewish-Arab relations? The kingmaker in forming the new government was a Palestinian citizen of Israel, Mansour Abbas, whose conservative Islamist party, the United Arab List (known as Ra'am) won four seats.

This will be the first time that an Arab party will be an actual partner in an Israeli government.

Coming on the heels of the latest Israeli-Hamas war, which sparked serious clashes between Arab and Israeli citizens of Israel, Abbas' pivotal role is all the more vital.

His demands center on redress for discrimination against Israel's Arab citizens - which is central to avoiding civil war inside Israel. But his party's key political role will make it harder for the new government to sweep broader Palestinian issues back under the rug.

"For the first time in decades an Arab party is fully and openly participating in the [Israeli] political game, with Ra'am chair Mansour Abbas as an equal among equals," writes Afif Abu Much on the respected Mideast news site Al-Monitor. "This is history in the making."

All the more so, because Netanyahu himself - a leader who incited against Arabs to boost his party's turnout - was the first to turn to Abbas. He hoped that Ra'am would give him the seats he urgently needed to finalise a government.

It was Bibi who "legitimized including Abbas's party in a coalition with right-wing parties," writes the Israeli paper Ha'aretz. In his desperation to remain prime minister, with corruption cases against him ongoing, Bibi broke a long-standing political taboo - even though he's now slamming Bennett for "selling out" to the Arabs.

Ra'am's presence in the coalition won't get the peace process restarted. With such a fractious coalition, both left- and right-wing Jewish parties, and Abbas, want to focus on domestic Israeli issues, rather than the future of Gaza and the West Bank.

Assuming the new government is approved by the Knesset next week (and this is not 100 per cent certain) Bennett has committed to rotate the prime ministership in two years with secular centrist Yair Lapid, who will now serve as Foreign Minister. Lapid supports a two-state solution, but with sharp limits attached.

Yet the demands that Abbas made in return for Ra'am's joining the coalition are directly relevant to the future of the West Bank and Gaza. Besides funding for desperately needed infrastructure and policing in Arab towns, his most critical ask went to the heart of the issue that triggered horrific Israeli-Palestinian violence last week.

The original spark for that mini-war revolved around planned Israeli demolition of Palestinian homes in the East Jerusalem neighborhood of Sheikh Jarrah, without compensation. Palestinians see such demolitions as aimed at driving them off their land.

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Demolitions of Palestinian homes in Jerusalem, the West Bank - and inside Israel - are common, often because Palestinians lack building permits, which are extremely difficult if not impossible to obtain from Israeli officials. Such destruction especially embitters Palestinians on the West Bank, where Jewish settlements and roads are constantly expanding on land there.

And the demolitions compound the housing shortage for Palestinians inside Israel. "While Israeli Arabs constitute 20 per cent of the population, Arab communities' jurisdictions occupy just 2.5 per cent of the state's land area," writes Ha'aretz, "and the process of approving new construction in Arab towns takes decades."

This is second-class citizenship writ large.

So Abbas has demanded "retroactive building permits for tens of thousands of [Arab] structures [within Israel] built illegally and now facing demolition," writes Ha'aretz, along with the amendment of a controversial 2017 law that mainly targets Arab communities for such illegal building. He also insisted that three unrecognized Bedouin villages in southern Israel be legalised, not destroyed.

If Abbas' demands are met - he claims he has commitments - this would mark a revolution in Jewish-Palestinian relations within Israel. And it would embolden demands from Palestinians in the occupied West Bank, Gaza and East Jerusalem, for fairness and justice where they live.

The new coalition government may or may not last, but if Ra'am is stiffed it can ensure a government collapse.

So here is the biggest irony of Bibi's defeat: by (unintentionally) legitimising full Israeli-Arab participation in government, he has jolted Israeli politicians into recognising a reality they had been avoiding. Palestinian demands for equality can no longer be brushed aside.