Israel is, once again, at an imperative political crossroads. Having failed to form a coalition government, the leader of Kadima party and Foreign Minister Tzipi Livni has opted to relent and call for a snap election. She could have spent more time bargaining with smaller parties, but an apparently angry Livni has decided to take the battle to her political opponents and solicit the backing of a frustrated public.

Livni made her decision after her negotiations with the ultraorthodox Shas party collapsed over what she described as “excessive” demands. She needed that party’s support to consolidate her alliance with the Labor party and lead a broad coalition that would have staved off her rivals.

Her “maverick” reaction and bold criticism of would-be partners may have endeared her to Israeli voters. Latest polls showed that her party had overtaken right-wing Likud, led by Benjamin Netanyahu. But Israeli politics is fast-moving and turbulent and the mood could sway again in Netanyahu’s favor by election day, which Israeli President Shimon Peres will set at the end of January or beginning of February.

When Shas announced it had decided not to join a Livni-led coalition last week, many Israeli observers believed that both she and Kadima have been written off. That judgment may have proved to be precipitous.

Netanyahu, who was leading in public opinion polls until then, has been pushing for early elections. He had urged Shas leadership to brush aside Livni’s overtures. But now he will have to find other ways to stem her sudden popularity. He has plenty of time to do so and his associates have already slammed her as someone who lacks leadership, talent and abilities.

If Livni and her party had gone through unexpected rejuvenation lately, other parties are not so lucky. Labor, led by Ehud Barak, is a mere shadow of its glorious past. Barak had been tested before and, in the view of the Israeli public, his premiership was a failure. Labor will have to brace itself for a tough election and some polls suggested that its share of seats in the Knesset will suffer badly.

But Israeli voters are known for their political amnesia. Netanyahu had also been tested before when he became prime minister from 1996 to 1999. Haunted by scandals and allegations of corruption, he was defeated in elections and replaced by Barak.

Livni’s gambit may just work. She is a relatively fresh and unscarred face in Israeli politics and while she may have failed to build a coalition this time, the former Mossad agent and lawyer, was able to make a convincing case to public opinion. In explaining her refusal to give in to “blackmail” she said that “a prime minister is chosen first and foremost in order to promote the interests of the state, and anyone who is willing to auction off his ideals for a seat is not worthy of sitting in it.”

Such straight talk was well received by an Israeli public that has become weary of corrupted officials and seeing leaders awarding free gifts and favors to religious parties. In addition to special financial perks, Shas made one political demand which Livni would not accept: To make Jerusalem off limits in negotiations with the Palestinians.

In her words, caving in to such demand would mean “the end of negotiations.” It would also herald the collapse of her partnership with Labor and bring further fragmentation of her own troubled party.

Kadima was formed by Ariel Sharon in 2005, one of the political pillars of Likud, with a “centrist” and “liberal” agenda. Sharon, riding a wave of popularity then, was hoping to make Kadima a majority base that can absorb smaller secular and religious parties and attract prominent politicians. He hoped his new party would muster enough votes in the Knesset to implement a final settlement with the Palestinians.

Indeed, Kadima won the 2006 elections and became the largest party in the Knesset. Defectors from Likud and other parties embraced Sharon and even Peres formally joined the new government after quitting Labor.

Ehud Olmert took over after Sharon’s illness, but his losing gamble in Lebanon, and allegations of personal corruption, left the party shaken and weak. On the eve of Olmert’s resignation few weeks ago, Kadima looked all but beaten.

The question now is how can Livni reinvent the party? She has shunned small Arab parties, distanced herself from the religious establishment, and is leading a divided Kadima, with many members still supporting her rival for leadership Shaul Mofaz.

With Labor in trouble and Netanyahu and his right-wing and ultraconservative allies on the attack, she will have to remind the public of Kadima’s original reasons for existence, which was to conclude a final peace settlement with the Palestinians, while serving Israel’s best interests.

The problem with this approach is that Olmert had already wasted more than two years negotiating with PNA President Mahmoud Abbas without a result, while Livni herself was in charge of these negotiations. This is probably why in recent weeks Peres and Barak, Livni’s closest allies, have been promoting the Arab peace initiative. In their view, the plan presents a good base for a comprehensive peace with the Arab world.

This renewed interest in the Arab proposal, which was shrugged off by Sharon and ignored by the Americans, could prove to be a red herring. But this could be Livni’s trump card in the upcoming elections. If she could market herself as the most capable leader capable of achieving peace with the Arabs, then her chances against Netanyahu and other opponents will be boosted.

It is a delicate game with a lot at stake. As Israelis engage in domestic politics the peace process will once again take a respite, and if President George Bush is still hoping to find a legacy in an Israeli-Palestinian agreement before he leaves office he will be disappointed.

— Osama Al Sharif is a veteran journalist based in Amman.