Little more than a year ago, Yair Lapid was the great white hope of Israeli politics.The buzz around him, especially among the young and upwardly mobile, was unprecedented. The self-styled savior of the secular middle class, he would slay the twin dragons of inequitable wealth distribution and soaring housing costs, get Haredim to join the army and the work force, and tip the balance in favor of peacemaking with the Palestinians, keeping Israel both Jewish and democratic.With 19 Knesset seats in the January 2013 election, his fresh-faced centrist Yesh Atid party, promising politics in a new key, had emerged a big winner. Lapid was able to dictate the composition of the new Netanyahu-led government and was already being touted as a future prime minister.His meteoric rise did not go unnoticed abroad. In April, he made Time magazine’s list of the 100 most influential people. And in December, he appeared on Foreign Policy’s roster of top global thinkers for 2013. Prime Minister Benjamin Netanyahu was absent from both lists.Lapid’s fall from grace, however, was almost as rapid as his ascent. For his embattled middle class constituency, hungry for results, expectations from the neophyte politician were impossibly high.When he failed to deliver in short enough order, his popularity plummeted. Just eight months after his electoral triumph, in a poll for Israel TV’s Channel 10, a whopping 65 percent of Israelis accused him of breaking his campaign promises; 47 percent of Yesh Atid voters said they wouldn’t vote for him again and 47 percent of those polled rated his performance as finance minister as poor. A string of national polls showed Yesh Atid losing between a quarter to half its strength in a new election. And, to top it all, in March this year, in a Channel 2 survey of public satisfaction with ministerial job performance, Lapid finished rock bottom, 23rd of 23 government ministers.So is Lapid, at 50, washed up? Is Yesh Atid about to follow the flash-in-the-pan-andimplode syndrome of all major centrist party successes from Yigael Yadin’s Democratic Movement for Change in the late 1970s to Tommy Lapid’s Shinui in the mid-2000s? Or does Yair Lapid (Tommy’s son) still have a major contribution to make in changing the tenor of Israeli politics, making Israel a fairer and more equitable society, and helping it disengage from the Palestinians? After the failure of the American-led Israel-Palestinian mediation effort, Israel is at a crossroads. Powerful nationalist, anti-democratic forces are pulling towards continued occupation as countervailing center-left forces fight to maintain a liberal Western-style democracy. With Netanyahu’s 68-member coalition deeply divided along these lines, Lapid finds himself at the center of the struggle, holding the balance of power.And the question, with major ramifications for Israel’s future, is will he use his 19 seats as a fig leaf for the nationalist right, or as a lever to force the issue and help maintain a Jewish and democratic Israel? Lapid’s decline in popularity at home came within weeks of his appointment as finance minister. It stemmed from his perceived detachment from everyday middle-class life and inherent inability to introduce significant changes into the way the national economy is run. His initial misstep was a Facebook post on a fictitious “Riki Cohen from Hadera” who, with a putative family income of $6,000 a month, couldn’t make ends meet. The trouble was that most middle-class families don’t earn anything like that. Lapid’s inflated figures seemed to indicate that the minister was out of touch with basic economic realities. The ensuing disconnect from much of his natural constituency was profound. Worse: As finance minister facing an inherited $10 billion deficit, Lapid found himself locked into a straightjacket of responsible economic management. He became an easy target for opposition parties looking to bite into the centrist vote. In a July debate on the housing budget, Labor MK Itzik Shmuli produced a paper purporting to show how Lapid had broken all his housing promises. For example, he had pledged to help young couples in the periphery, but instead had canceled a special NIS 60,000 ($17,000) housing grant; he had defined raising taxes as a “red line,” but still he had put them up; he had promised to lower housing prices to 2007 levels, an average of 99 salaries per apartment, yet he had left them at 138 salaries, one of the highest salary to housing ratios in the developed world (see “When the Bubble Bursts,” page 14).And there was more. In late July, to cover the gaping deficit, Lapid was forced to pass a tough austerity budget, raising taxes and slashing government spending. Then Labor leader Shelly Yachimovich upbraided him for “perpetuating the destructive erosion of the middle class.” Lapid retorted that as finance minister he had to deal with real economic exigencies and accused opposition MKs of living in a “fantasy world.” The “responsible adult” argument, though, did not do Lapid any good. In the public eye, seen as captive of the old politics and the old bureaucracy, he lost his luster as champion of the middle class.Another turn-off for left-leaning Yesh Atid voters was the party’s continued support for settlement funding across the Green Line. In his election campaign, Lapid had famously asked “where is the money” the middle class wasn’t getting. One of the answers was huge government transfers to the settlers, which Lapid intended to curtail. Last March, Yesh Atid members of the Knesset Finance Committee blocked the transfer of $50 million from the World Zionist Organization to the settlements, but then a week later approved it, amid a chorus of derision from the opposition.Lapid had also startled left-leaning supporters immediately after the election with seemingly derisive comments on Israeli Arabs. When invited to join a center-left “obstructionist bloc” to prevent Netanyahu from becoming prime minister, he retorted that he would not be part of a bloc with the “Hanin Zoabis,” a contemptuous generalizing reference to an MK from the Arab Balad party.In mid-May, Lapid convened a meeting of Yesh Atid activists to celebrate the party’s achievements in its first year in government.On the economic front, he underlined the fact that he had been able to cover the budget deficit with hardly a ripple. He also took credit for collecting $1.25 billion in taxes on the “locked profits” of giant corporations like Teva, Checkpoint and Israel Chemicals. At the time he argued that this showed that he “was not working for the tycoons,” but for the middle class.Lapid’s biggest initiative for public rehabilitation through economic action is his plan to lower housing prices across the board by canceling VAT for young first-time home buyers, purchasing new apartments from contractors. Young people who have served in the IDF or national civilian service would be eligible for the tax exemption on apartments costing up to NIS 1.6 million ($460,000), while those who haven’t served would only get the exemption on apartments of up to NIS 600,000 ($170,000). The scheme has been criticized on two main counts: that it could actually lead to prices being forced up by increasing demand while supply remains constant, and that it discriminates against Arabs and Haredim, most of whom do not serve. In any event, it has yet to kick in in the popularity stakes. Where Yesh Atid had hoped to make major gains in public opinion was in the new IDF conscription law it sponsored and helped to draft. The main purpose of the law was to get more Haredim to serve in the IDF and join the work force – and so share the burden of defending the country and building its economy. But the law was criticized for its initially low draft targets for Haredim and the fact that its main provisions will only come fully into force in 2017. It was not seen by a skeptical public as heralding revolutionary change in Haredi attitudes and Yesh Atid failed to get the credit it felt it deserved.Knesset Member Ofer Shelah, who helped shepherd through the new legislation, argues that the reason it will work where all previous attempts failed is because this time there is an automatic enforcement mechanism: for example, yeshivas that don’t reach their draft targets will have their budgets cut. Moreover, Shelah predicts that growing numbers of Haredim joining the IDF will have a snowball effect, creating a revolutionary process within the Haredi community, the upshot of which will be a large majority joining the IDF and the work force. If this happens the significance for Israel would be huge and Yesh Atid could legitimately claim a historic achievement. The problem for Lapid and his party is that all this is still very much in the future.In the here and now, Lapid lost further ground when he seemed to abandon Shelah, his closest confidant, in the latter’s bid for chairman of the Knesset’s prestigious Foreign Affairs and Defense Committee. In the initial allocation of government portfolios, Yesh Atid had been hard done by: with 19 Knesset Members, it had received only five government ministries, whereas, the Likud with 20 MKs got eight and Yisrael Beitenu five with only 11 MKs.As compensation, Yesh Atid was promised Lapid ’s political future is likely to be decided by two major ongoing battles within the coalition: over the defense budget and peacemaking with the Palestinians Foreign Affairs and Defense on a rotating basis with Likud. The only argument, which raged for several months, was over who would go first, Shelah of Yesh Atid or the Likud’s Tzachi Hanegbi. But when two other prominent Likud MKs, Zeev Elkin and Yariv Levin, insisted on sharing the Foreign Affairs and Defense Committee as a condition for jointly running Netanyahu’s precarious coalition, the prime minister backtracked on his promise to Yesh Atid. Although his friend Shelah was the big loser, Lapid never said a word.Nevertheless, despite all the initial wrong turnings, Lapid is still in a position to do great things. His immediate political future is likely to be decided by two major ongoing battles within the government coalition: over the defense budget and peacemaking with the Palestinians. The defense establishment claims money has run out and the IDF has canceled reservist training exercises, including weekly flights by reservist pilots.Unless Lapid allocates more money for defense, the IDF could find itself unprepared, defense officials argue.Lapid counters that major cuts could and should be made in the defense establishment as a whole, and the money saved transferred to IDF operational needs. At stake is Lapid’s relationship with his middle-class constituency. More money for defense could mean higher taxes and/or sharp cuts in public services like health, education and welfare.Lapid’s position as champion of the middle class could depend on how well he stands up to defense establishment pressure.Another key issue will be Lapid’s attitude to peacemaking with the Palestinians.Indeed, it could decide the future of the current government coalition. After the talks with the Palestinians broke down in April, Lapid remained solidly behind Netanyahu.There was no threat to bolt the coalition unless the prime minister adopted a more serious negotiating posture or presented a new plan of his own. On the contrary, in a Time magazine op-ed in late April, Lapid argued that Palestinian leader Mahmoud Abbas was solely to blame for the collapse of the process. It was Abbas’s plan, out of the blue, to form a new government with Hamas, an organization “whose declared purpose is to destroy Israel and kill Jews just because they are Jews” that had caused the deadlock.“Our goal was and remains to continue talks until an agreement is reached. But before that, we must know something very basic: With whom exactly are we talking?” Lapid wrote.The problem with that approach is that it gives Hamas veto power over Israel’s future.That was one of the main reasons for Justice Minister Tzipi Livni’s mid-May meeting in London with Abbas: To examine whether and under what conditions productive talks could be renewed – and, if not, what kind of alternative plans Israel could consider. For Israel, decision time on the Palestinian issue is rapidly approaching. Both the left and the right are talking about unilateral moves if a negotiated settlement proves out of reach – the right is talking annexation, the left withdrawal.There is also talk on the left of a freeze on settlement building outside the large settlement blocs to create a more positive atmosphere for reengagement. In this context, there are even rumors of tentative feelers towards an alternative center-left “peace coalition” including Yesh Atid, Labor, Hatnua, Meretz, Kadima and the Haredi parties for a 66 member majority in the Knesset. Indeed, according to some reports, Netanyahu saw Livni’s meeting with Abbas as part of a center-left cabal aimed at unseating him as prime minister. That, according to the reports, is why he threatened to fire her. More importantly, the fact that Lapid reportedly intervened to prevent the firing reemphasizes just how much leverage he has over the prime minister.How he uses it on the defense budget and the Palestinian issue could be the making or breaking of a national leader.