Ideologically divided and with still smoldering personal antipathies, Prime Minister Benjamin Netanyahu’s third government finally got underway in mid-March after six weeks of often acrimonious political arm-wrestling among the prospective coalition partners.But will the obvious internal contradictions make for a dysfunctional and short-lived administration – or will the leading players be able to put their differences aside for the sake of highly ambitious domestic and foreign policy agendas? On the domestic front the aim is for nothing less than major social and economic transformation; in foreign policy the goals include progress on the deadlocked Palestinian track, preventing Syrian chemical weapons from falling into terrorist hands and nullifying the Iranian nuclear threat.The most immediate domestic priority – on which the coalition partners are ostensibly united – is the so-called “sharing of the national defense burden,” code for breaking the cycle of ultra-Orthodox Haredi parasitism on the state. But, even here, they may find it impossible to pull together.As things stand, the vast majority of Haredim don’t serve in the IDF, and, because they have to claim to be full-time Torah students to gain exemption, they can’t work at any other job. This creates a doublewhammy: the state pays income supplements to tens of thousands of non-working Haredim, while losing their huge potential contribution to the economy as a whole.Yesh Atid’s Yair Lapid made a commitment to resolving this anomaly his key coalition demand. Now he has the power to do something about it. Yesh Atid has the Finance and Education Ministries and its close ally Bayit Yehudi the Knesset’s Finance Committee.This gives Lapid control over the state-to- Haredi money trail. As Minister of Finance, he plans to introduce a system of incentives and disincentives, coupled with vocational training programs, to get significantly more Haredim to join the labor force. Yesh Atid Education Minister Rabbi Shai Piron will be able to cut budgets to Haredi schools that refuse to teach a core curriculum designed to prepare pupils for employment in the modern world. Knesset Finance Committee Chairman, Nissan Slomiansky of Bayit Yehudi, can be counted on to underwrite the Yesh Atid moves.The government is also set to introduce a mainly Yesh Atid plan for Haredi national service, under which only around 1,700 exceptionally gifted Torah students would be exempted each year. The other 5,000 or so would serve in the IDF or do some other form of national service, after which they would be free to join the labor force. To make military service more palatable for the Haredim and give secular Israelis a squarer deal, by 2015 compulsory service will be reduced from three years to two, with an optional third year with full minimum-wage pay. But there’s a potential catch. Given the strategic alliance between Likud and the Haredi parties that helped Netanyahu get elected prime minister in both the last two elections – how far will he allow Lapid to go on the Haredi front? There is already talk of his bringing the Haredim into the government as soon as it is politically possible with an eye to renewing the alliance.Despite the power it gives him on key issues, the Finance Ministry was not Lapid’s first choice. He wanted the less risky and more glamorous Foreign Affairs portfolio to build himself up as a potential prime minister.Netanyahu’s maneuvering him into finance was something of a trap: Given last year’s huge budget deficit, Lapid will inevitably be forced to make unpopular budget cuts and raise taxes. And if he emerges as the bad guy in the economic story – the way many finance ministers before him including Netanyahu have done – he will pose less of a threat for the premiership.Lapid has other ideas. He hopes Yesh Atid’s nine-point economic plan, which was presented in detail during the coalition negotiations, will reinvigorate the economy The new Netanyahu government will face strong opposition in the Knesset and prove a resounding success. It includes a national plan for small businesses as a major growth engine; enlarging the work force by bringing in more women, Haredim and Israeli Arabs; an uncompromising war on undeclared income; a new simplified and more equitable income tax law; and bringing down skyrocketing housing costs by building 150,000 apartments for rent.The 2013 state budget, which has to be passed within 45 days of the government being sworn in – unless the law is amended to extend the time limit – will be a first acid test of whether Netanyahu and Lapid can work together on the economic front without trying to trip each other up at every turn.Another top priority on the new government’s agenda will be changing the electoral system. Already all the coalition partners have agreed to raise the minimum threshold for election to the Knesset from 2 to 4 percent of the popular vote. A more important change will be making the leader of the largest party automatically prime minister. Up till now, both Netanyahu and Lapid have supported this. But in light of future opinion polls or pressure from potential coalition partners one of them could get cold feet.Tensions within the coalition are also certain to be exacerbated over attempts to introduce anti-democratic legislation. The right-wing Young Turks in the Likud have forced out the old-style Jabotinskiite/Herut democrats like Benny Begin, Dan Meridor and Michael Eitan, and replaced the Jabotinskiite Reuven Rivlin as Knesset Speaker with the more right-wing Yuli Edelstein.There is now far less of a buffer within the Likud and the Knesset to contain antidemocratic legislative initiatives aimed at the Arab minority or the Supreme Court. The young right-wingers will almost certainly push their anti-democratic agenda in a bid to stand out and please the right-wing party rank and file. This could lead to serious clashes with other coalition members, especially Hatnua’s Tzipi Livni. As justice minister and head of the ministerial committee on legislation, she will be in a position to block would-be anti-democratic lawmaking.She has already said she will not allow a proposed Likud-Bayit Yehudi bill giving Israel’s Jewish character primacy over its democratic values to go forward.Livni could also find herself at odds with right-wing coalition members on the Palestinian question. She sees the two-state solution as absolutely crucial for Israel’s future and as leader of Israel’s negotiating team is determined to take the peace process forward. At the recent Herzliya Conference, she insisted that her previous negotiations with the Palestinians in 2007-8 had not ended in deadlock, implying that, in her view, progress is imminently possible.But here, too, the make-up of the coalition is fraught with internal contradictions. Naftali Bennett’s settler-friendly Bayit Yehudi and right-wingers in Likud and Yisrael Beytenu will not give Livni much leeway.Moreover, not since Menachem Begin’s heyday has there been a government with so many supporters of Jewish settlement construction in the key positions that determine how much or how little the settlers can build: settler-friendly hawks like the Likud’s Moshe Ya’alon in the Defense Ministry, Uri Ariel of Bayit Yehudi in Housing and Bayit Yehudi’s Slomianski chairing the Knesset’s Finance Committee will make permits and funding for construction that much easier to obtain – and put a spoke in the wheels of any negotiation Livni might be engaged in.Much will depend on Netanyahu’s leadership and whether or not he really wants to go forward on the Palestinian track.He tends to highlight the current regional instability and to suggest that this is not the time for Israel to take risks for peace. Livni counters that procrastination could prove disastrous.Clearly, this was not the government Netanyahu wanted. Not so much because of the internal contradictions. Rather, it was more a case of personal and political preferences. His first choice would have been to maintain his strategic pact with the Haredim, bring in the Labor party and carry on more or less from where his last administration left off.He didn’t want Bennett for personal reasons and he didn’t want the charismatic Lapid who, he fears, could use his elevated status in government as a launching pad for a not-so-distant future challenge for the premiership. But by working in tandem, Lapid and Bennett forced the prime minster to accept them as senior coalition partners and to adopt large parts of their political programs.Still, Netanyahu did not do as badly in the coalition negotiations as some of his critics suggest. With only 20 Likud seats and together with Yisrael Beiteinu only 31 of the 68 in the coalition, he managed to retain the key Foreign, Defense and Interior portfolios.He will also have a built-in Likud-Yisrael Beytenu majority in the government and the 7-member inner cabinet.Lapid, too, made obvious gains. He forced a small government on Netanyahu with only 23 ministers including the prime minister.He also forced Netanyahu to accept a government without Haredim. And through the Finance and Education ministries he should be able to push through key elements of his civil agenda.His partner Bennett also did very well for his mainly settler constituency. With the Trade and Industry and Housing ministries, as well the Knesset Finance Committee, he will be able to help them build, create jobs and secure special funding. And through the Religious Services ministry he will be able to shift much of the control of religious affairs in Israel from the Haredim to the national religious movement.With Likud’s coalition allies and partners taking 15 portfolios – Yesh Atid 5, Yisrael Beytenu and Bayit Yehudi 4 each, and Hatnua 2 – there were only 7 mostly minor ministries left for Likud.This sparked a wave of strong anti- Netanyahu feeling in the Likud. Senior party figures point fingers at the prime minister for making “one mistake after another”; the “original sin” was the election pact with Yisrael Beytenu, which saw the two parties plunge from the 42 seats they held separately in the previous Knesset to 31 together in this.They also blame Netanyahu for a poorly-run election campaign and poorly-conducted coalition negotiations.As a result, the younger generation of up-and-coming politicians did not get the ministerial posts they had hoped for. There were simply not enough to go around.Netanyahu, they say, sacrificed the party for the premiership. This has left a pool of angry Young Turks, who could unite around an alternative leader. Gidon Sa’ar, for example, could use the Interior Ministry to strengthen his political base and challenge Netanyahu.The new Netanyahu government will also face strong opposition in the Knesset. The Haredi parties intend to work closely with Labor, especially against the government’s economic policies. Labor spokesmen dismiss the new government as settler-oriented and unlikely to advance peacemaking with the Palestinians one iota, and wedded to neoliberal economic practice that will hurt both the middle class and the needy.Netanyahu and Lapid will have to find ways of working together while struggling against each other for pole position in the next race for national leadership. The same goes for Bennett and Liberman. They too have their eyes on the top job. The four will either succeed together or go down together. And if they fail, a vibrant opposition, growing in confidence, will be waiting to take over.