Israeli electoral outcomes for Congress and other U.S. policymakers may have important ramifications for many issues, including the following: Overall U.S.-Israel Relations : Actual and perceived costs and benefits of close U.S. cooperation on specific policies or issue areas with the new Israeli government, as well as on the long-term direction of the bilateral relationship. Addressing Iran's Nuclear Program : Imminence and urgency of major U.S. decisions regarding the use of diplomatic and/or military means to address Iran's nuclear program, based on calculations of a potential Israeli willingness to unilaterally attack Iranian nuclear facilities. U.S. Policy in the Middle East : U.S. priorities and substantive approaches to a wide range of foreign policy issues, especially with regard to issues of ongoing Israeli-Palestinian dispute, the civil war in Syria, and domestic political developments in Egypt, Jordan, and elsewhere in the region. Prime Minister Binyamin Netanyahu came to power following elections in 2009, and called for the 2013 elections to take place in January, nine months before they were required. Although stalemate in passing a 2013 national budget ostensibly motivated Netanyahu's decision to hold early elections, many observers asserted that Netanyahu viewed their timing as favorable. Most polls and analyses predict that Netanyahu will win another term as prime minister. For the elections, his right-of-center Likud party is paired with the pro-secular, nationalist Yisrael Beiteinu (Israel Is Our Home) party of former foreign minister Avigdor Lieberman. However, Lieberman's December resignation from the government as a result of his indictment for fraud and breach of trust may have—along with other developments—contributed to a discernible drop in polling support for the joint Likud/Yisrael Beiteinu list (commonly known as "Likud Beiteinu"). This could increase Netanyahu's dependence on small parties with right-of-center or ultra-Orthodox constituencies that are passionately devoted to specific issue areas and have seen their polling averages rise. Theories differ regarding how Netanyahu plans to use a renewed mandate. Various coalition partners, cabinet ministers, and an apparently increased rightward tilt within Likud following its November primary elections might influence or constrain Netanyahu in efforts to address a range of challenges. These include the Iranian nuclear issue, cost-of-living and other budgetary matters, and the seemingly intractable situation with Palestinians and settlements (or neighborhoods) in the West Bank and East Jerusalem. For further discussion, see " Key Electoral and Coalition-Building Questions " below. In light of established security measures that continue to protect civilians from Palestinian terrorism and a generally positive macroeconomic outlook, it is unclear that consequential sections of Israel's voting public are eager to change the governing status quo. Netanyahu's opponents from the center and left appear thus far to have been unsuccessful in attempts to gather a bloc with the support or cohesion necessary to become a viable political alternative. With former Prime Minister Ehud Olmert ultimately opting not to run, the alternatives to lead a coalition are Shelly Yachimovich of the Labor party, former foreign minister Tzipi Livni of the new Ha'tnua (The Movement) party, and former journalist Yair Lapid of the new Yesh Atid (There Is a Future) party. Their respective parties seem to have attracted support away from Kadima (Forward), which was the largest party in the Knesset over the past six years under the leadership of Olmert, Livni, and current leader Shaul Mofaz. Netanyahu's consistent polling advantage over possible rivals on questions of national leadership has reportedly led to posturing among Yachimovich, Livni, and Lapid in attempts to avoid the outcome of a Netanyahu-led right-of-center/ultra-Orthodox coalition. Their criticisms of Netanyahu vary. Livni focuses largely on Netanyahu's approach to Palestinian issues and how they affect relations with the United States, while Yachimovich and Lapid concentrate more on proposals to change different socioeconomic policies. Although early January statements by all three possible Netanyahu rivals indicated that they are discussing ways to bring center-left elements into the government, sources reportedly quoted from within the Labor party indicated skepticism that a significant challenge to the governing status quo would take shape, based partly on disagreements over political tactics: There is no common language between Shelly [Yachimovich], who announced that she wouldn't enter the government in any case, and Lapid who demands that the three parties jointly negotiate with Netanyahu in order to enter his government. There is no common ground between Livni, who demands recommending a candidate from the centrist bloc to the premiership, and Lapid who has declared that he has no such intention. As discussed below, developments during the campaign indicate that potential right-of-center Netanyahu coalition partner Ha'bayit Ha'yehudi (The Jewish Home)/National Union might eat into Likud Beiteinu's share of the vote by holding itself out as more committed to constituencies who support the construction and maintenance of Jewish settlements. See Appendix for a list and brief descriptions of major parties contesting the elections. The Israeli electoral and coalition-building process is known for its fluidity and unpredictability, given the low threshold of entry (2% of the vote) for parties in the Knesset. Major parties routinely have difficulty in achieving and maintaining broad, lasting coalitions because several smaller parties are able to attract constituencies intensely focused on specific security, economic, or social issue areas. These parties often exert disproportionate influence in national politics when their support is crucial to coalition-leading parties. Since the 2009 elections, apprehension within Israel related to the Iranian nuclear crisis and political change in the Arab world have further challenged the centrality of Palestinian issues in Israeli politics. In addition to demanding attention in their own right, these newer concerns raise questions in Israel about the viability of the concept of peace based on territorial compromise, given the changed regional and international circumstances they reflect and reinforce. Many on the Israel right have consistently rejected or expressed skepticism regarding territorial compromise, and the shifting context has arguably increased the credibility of their views among the Israeli public. Skeptics of the land-for-peace formula set forth in 1967 by United Nations Security Council Resolution 242 assert that the likelihood of the formula's acceptance by Palestinians and Israel's Arab neighbors has been significantly undermined by Iran's material support for non-state militias in Lebanon and Gaza and increased instability and Islamist populism in Egypt, Syria, and Jordan. Nevertheless, many from elite Israeli political, military, media, academic, and business circles remain driven by traditional center-left concerns holding that the lack of a durable, mutually acceptable arrangement with Palestinians undermines Israel's long-term security and international legitimacy as a Jewish-majority, democratic state. This is largely due to various means of control that Israel exercises over populations in the West Bank and Gaza Strip who seek autonomy or independence. These elites warn that in the context of challenges from Iran and the Arab world, the renewal of open Israeli-Palestinian conflict in the West Bank and Jerusalem or heightened instability in those areas could considerably worsen Israel's regional security situation while also increasing its international isolation. In large measure, Netanyahu assembled Israel's 2009 government to undergird his personal leadership and support him on key security issues. Perhaps consequently, he has been unwilling or reluctant to act against some of his coalition partners' core constituencies on various matters of concern. These include reducing or revoking military service exemptions or subsidies for ultra-orthodox Jews (Haredim), and revisiting societal conditions that have arguably enabled religiously- or ethnically-based intimidation and vandalism and political efforts to quash some forms of dissent. Changing demographics are shaping the Israeli political landscape in potentially important ways. Israeli demographic trends reflect an increasing share of the population for groups that tend toward nationalism and right-of-center policies, and a decreasing share for left-of-center groups associated with the largely Ashkenazi founding elite. A 2011 book analyzing these trends argued that they partly explain why Israel's current Jewish population is "more nationalistic, religiously conservative, and hawkish on foreign policy and security affairs than that of even a generation ago." The traditional support of many Mizrahi Jews for Likud and other nationalistic parties as a counter to Ashkenazi-dominated left-leaning parties such as Labor and Meretz has been augmented by these nationalists' common cause with Russian-speaking immigrants from the former Soviet Union and, in some cases, Haredim with high birthrates. Arab parties (see Appendix ) are also represented in the Knesset, as Arabs constitute 20% of Israel's population, but political leaders have sought to build coalitions solely with the support of other Jewish Israeli parties because of the widespread Israeli Jewish perception that Arab parties fundamentally diverge from the Zionist idea at the core of Israel's identity. The likely long-term effects of Israel's continuing political evolution on its internal cohesion and ties with the United States and other international actors are unclear. Criticism of Netanyahu's government by some U.S. and international observers has been especially intense on the subjects of settlement expansion. Many of these critics accuse Israel's leaders of a penchant for short-term thinking, focused on maintaining territory and security control, at the potential expense of a longer-term vision of mutual accommodation with Palestinians and other regional actors (see " How Might International Factors Affect the Process? " below). Some international actors have also joined domestic critics in routinely questioning whether Israel's political tradition of secular, pluralist Zionism and vigorous debate is taking a potentially illiberal turn, though Netanyahu has spoken out frequently against religiously-motivated and gender- or ethnically-based discrimination. Some Israelis regularly dismiss these critiques—including those that come from parts of the largely Ashkenazi but ideologically diverse Jewish-American community. They insist that international actors do not properly take into account the proximity, multiplicity, and seriousness of the security challenges Israel faces, or the efforts that Netanyahu and other Israeli leaders have made in containing settlement construction. As maneuvering within and among parties continues in preparation for the 2013 Israeli elections, a few key questions have emerged that could have a substantial impact on voting results and the new government's composition. These, in turn, could have significant implications for Israeli leaders' future policies and actions, including their conduct of relations with the United States. Following the announcement of Yisrael Beiteinu leader Avigdor Lieberman's impending indictment and his resignation from the current government in mid-December, the Israeli media has been awash with speculation about the potential for these developments to transform the election or change the character of another Netanyahu-led government. Before the mid-December events, several reports analyzing the October Likud/Yisrael Beiteinu electoral merger asserted that Netanyahu—mindful of the close result (discussed in a textbox above) in the 2009 elections—wanted to ensure that he would have the prerogative to form the next government, and that Lieberman was positioning himself to become prime minister after Netanyahu. Since the indictment, opinion polling indicates a dip in voter support for "Likud Beiteinu" from a projection of nearly 40 Knesset seats to 35 or even slightly less—not enough to threaten the joint list's projected first position in the elections, but possibly enough to weaken Netanyahu's coalition-building and governing leverage within the list and with other parties. Lieberman's troubles and the uncertainty they portend might contribute to this apparent decline in popularity. However, other factors could include possible concern among core constituencies from each party (working class Mizrahim in Likud, Russian speakers in Yisrael Beiteinu) that joining forces with the other will dilute these constituencies' relative power within the joint list. Some among right-of-center voters might also perceive that their support of smaller parties will not harm Likud Beiteinu's coalition leadership prospects. One could argue, however, that Netanyahu's overall leadership of the joint list will largely insulate Yisrael Beiteinu from the consequences of uncertainty that it might have suffered following the indictment had it stood alone in elections. If Lieberman is unable to serve as a minister in the next government, Netanyahu (should he remain prime minister) might have more flexibility to offer prestigious ministerial positions to potential coalition partners, although even if Lieberman is not in the government, his status as Yisrael Beiteinu leader will provide him some influence in the post-election process. Depending on the duration and circumstances of Lieberman's case, Netanyahu might himself act as temporary caretaker of a ministry he would cede to Lieberman upon the case's resolution, or appoint someone else willing to do so. Given Lieberman's largely negative reputation among U.S. and other Western officials, partly due to his contentious positions regarding the Palestinians and other potentially key interlocutors such as Turkey, some Israeli and international actors might welcome his long-term absence from government. However, a Lieberman hiatus probably will not by itself reverse or eliminate broader Israeli political trends and security concerns that could increase friction with Western interests or sensibilities. Though polls and public debate indicate a prominent role for socioeconomic issues in the campaign, several regional and international issues could influence electoral outcomes or the subsequent formation of an Israeli government. The elections will take place in an atmosphere of great uncertainty regarding Iran's nuclear program and political transition and conflict in neighboring Arab states, and in the aftermath of a November 2012 conflict with Palestinian militants based in Gaza. Nevertheless, issues pertaining to Jewish settlements in Palestinian-populated areas of the West Bank and East Jerusalem may also influence Israeli voters, including those choosing between different right-of-center parties. Such issues are closely associated with aspects of Israeli national identity and everyday life, and indeed often are characterized as domestic in nature. Netanyahu government announcements in November and December 2012 pertaining to proposed settlement plans and construction have drawn strong condemnation from the United States and the international community—perhaps most prominently from Western European countries that have historically maintained good relations with Israel. These announcements are apparent reprisals for the U.N. General Assembly's adoption of Resolution 67/19 on November 29, which changed the permanent observer status of "Palestine" (the Palestine Liberation Organization, or PLO) at the United Nations from that of an entity to a "non-member state." The United Kingdom and other European Union member states have hinted that, absent a change of Israeli policy, they may in the future go beyond their routinely vociferous opposition to settlements by substantively curbing or limiting expansion of European political and economic cooperation with Israel. Some of Netanyahu's center-left political opponents and media critics have cited international condemnation of the timing and manner of the announcements in their more general critiques blaming Netanyahu and his allies for distancing Israel from President Obama and the United States and otherwise eroding Israel's worldwide goodwill. Yet, instead of discernibly aiding the center-left, whatever drop in Likud Beiteinu's opinion polling support may have occurred has coincided with an uptick in support for Ha'bayit Ha'yehudi/National Union, the adamantly pro-settler joint list. An ongoing Palestinian Authority (PA) budget crisis has sparked some protests in the West Bank. If it metastasizes into more widespread instability before the elections owing to PA delays and shortfalls in paying salaries of security personnel and other public employees, the political blowback Netanyahu and his Likud Beiteinu list would face might depend on the direct consequences to the Israeli public. The Israeli government has withheld tax and customs revenue transfers from the PA since the adoption of U.N. General Assembly Resolution 67/19. Netanyahu or whoever else forms Israel's next government will face challenges in simultaneously seeking to address various problems facing Israel and to maintain his or her coalition. The growing likelihood that Likud Beiteinu will not exceed 40 Knesset seats might make Netanyahu's choice of coalition partners more significant for the policy priorities of a new government, assuming that he remains prime minister. Although Netanyahu has previously favored traditional right-of-center coalition partnerships, a range of different alignments is possible depending, for example, on whether he prioritizes addressing Iran's nuclear program; the Palestinians and settlements; or cost-of-living and other socioeconomic questions that include Haredi lifestyle subsidies and military conscription. One instance may be illustrative. In a late December interview, Ha'bayit Ha'yehudi leader and military reserve officer Naftali Bennett was quoted as saying that he would personally ask to be exempted from official orders to evacuate a Jewish settlement, prompting Netanyahu to respond that his cabinet would not include those who support refusing orders. Subsequently, Bennett affirmed that soldiers must carry out orders, but other parties are reportedly angling to use Bennett's comments to their advantage, even though—as discussed above—polls indicate a spike in support for Ha'bayit Ha'yehudi and an accompanying decline in support for Likud Beiteinu. The composition of a new Netanyahu coalition and government could significantly influence the tenor of Israel's politics and its foreign relations, including with the United States. On one hand, enlisting coalition partners from other parts of Israel's political spectrum to join the government might help Netanyahu cultivate Western interlocutors—potentially gaining U.S. support for and reducing international resistance to Israeli national security initiatives. A broad-based coalition could also help ensure wider domestic approval for decisions of critical importance. On the other hand, coalition ministers from the center-left could work against potential efforts by Netanyahu to overcome existing opposition within Israel's security establishment, as well as possible U.S. and international opposition, to possible unilateral military action against Iranian nuclear facilities. In late December, Netanyahu reportedly dismissed rumors that he was considering appointing Livni to a ministerial position with responsibility for Palestinian issues. The extent of Netanyahu's desire to accommodate a broad range of domestic and international views in his policymaking deliberations could also be indicated in part by whether he reappoints Dan Meridor, Benny Begin, Avi Dichter, and/or Michael Eitan to his cabinet. These four individuals are all generally perceived within Israel as moderate or establishment figures. However, in Likud's November 2012 primary elections, they were all denied premier positions on the party electoral list in favor of a group that includes nationalists with "hardline" credentials. Israeli electoral outcomes may have major implications for U.S.-Israel relations and security cooperation. If the Likud/Yisrael Beiteinu partnership emerges with the largest Knesset representation, Binyamin Netanyahu would primarily shape the new coalition and government, but would need support from key Israeli constituencies outside his political support base. As part of this process, he would weigh a number of domestic and international considerations—including the lack of a clear rival to his immediate leadership—within an overall political, demographic, and regional security context. The strategic challenge of Iran's nuclear program and the potential for key short-term decision points on unilateral Israeli military action is paramount among these concerns. However, the concerns also include questions about growing threats in ungoverned spaces at Israel's borders; a seemingly more intractable Palestinian situation with increasing potential for West Bank instability and international isolation of Israel; and the future nature and extent of relations with a more Islamist Egypt, a potentially fragile Jordan, a war-scarred Syria vulnerable to extremism, and a conflicted, powerful, and less friendly Turkey. To the extent that Netanyahu's choices of coalition partners and ministers reveal his priorities and constraints as to policy initiatives, Members of Congress and other U.S. policymakers can use this information to assess the status and trajectory of U.S.-Israel relations and evaluate possible political, economic, and military options in the Middle East.

Summary: Close U.S.-Israel relations drive congressional interest in upcoming elections for Israel's 120-seat Knesset (parliament), scheduled for January 22, 2013. Israeli leadership decisions may have profound implications for matters of high U.S. priority, including potential threats from Iran and its non-state allies (such as Hezbollah and Hamas), issues of ongoing Israeli-Palestinian dispute, and political change in neighboring Arab states. The composition of a probable new coalition and government led by Prime Minister Binyamin Netanyahu could significantly influence Israeli decisionmaking, politics, and relations with the outside world, including the United States. In turn, this could affect U.S. popularity, credibility, and—ultimately—national security vis-à-vis the Middle East and more broadly. For more information on Israeli politics and U.S.-Israel relations, see CRS Report RL33476, Israel: Background and U.S. Relations, by [author name scrubbed]. Netanyahu came to power following elections in 2009, and called for the 2013 elections to take place in January, nine months before they were required. Most polls and analyses predict that Netanyahu will win another term as prime minister, but a drop in polling support for his joint Likud/Yisrael Beiteinu list—possibly due in part to the indictment of Yisrael Beiteinu leader Avigdor Lieberman—could increase his dependence on support from small right-of-center or ultra-Orthodox parties that focus on specific issues and have seen their polling averages rise. If they thus acquire disproportionate influence, such coalition partners—along with other parties, cabinet ministers, and "hardline" elements within Likud—might constrain or otherwise affect Netanyahu as he confronts a range of challenges that include the Iranian nuclear issue, cost-of-living and other budgetary matters, and the seemingly intractable situation with the Palestinians. Netanyahu's political opponents from the left and center appear thus far to have been unsuccessful in attempts to gather a bloc that represents a viable political alternative. The likely effects of Israel's elections and related political developments on its internal cohesion and foreign relations are unclear. Criticism by some U.S. and international observers of Netanyahu's government since 2009 has targeted expanding Jewish residential settlement in the West Bank and East Jerusalem. Many of these critics accuse Israel's leaders of a penchant for short-term thinking, focused on maintaining territory and security control, at the potential expense of a longer-term vision of mutual accommodation with other regional actors. Some Israelis dismiss this criticism by insisting that it does not properly take into account the proximity, multiplicity, and seriousness of the challenges Israel faces, or the concessions that Netanyahu and other Israeli leaders have periodically made. Should his party emerge with the largest Knesset representation, Netanyahu would play the leading role in shaping the new coalition and government, but would need support from outside his political support base. As part of this process, he would weigh various domestic and international considerations—including the lack of a clear rival to his immediate leadership—within an overall political, demographic, and regional security context. The strategic challenge of Iran's nuclear program and the potential for key short-term decision points on unilateral Israeli military action are paramount among security concerns. However, the concerns also include questions about growing threats in ungoverned spaces at Israel's borders, increased potential for West Bank instability, and the future nature of Israel's relations with neighboring countries and concerns about further international isolation. To the extent that Netanyahu's choice of coalition partners and ministers reveals his priorities and constraints as to policy initiatives, Members of Congress can use this information to assess the status and trajectory of U.S.-Israel relations and evaluate possible political, economic, and military options in the Middle East.