(AFP) – Mar 30, 2009

JERUSALEM (AFP) — Benjamin Netanyahu was set to become Israel's new premier on Tuesday, heading a predominantly right-wing cabinet that has sparked international concern over the future of troubled peace talks.

Returning to power 10 years after his first stint as prime minister, the 59-year-old Bibi, as he is popularly known, will present his government to parliament.

The Knesset opened its session to confirm the new cabinet shortly before 1430 GMT, with a vote on the government expected in the hours following.

Israel's 32nd government is set to be one of its largest ever, with a new table having been ordered to accommodate some 30 ministers and up to seven deputy ministers.

Earlier in the day, Netanyahu held last-minute talks in a bid to entice another ultra-religious party into the cabinet.

The 69-member coalition in the 120-seat Knesset leans heavily to the right despite the presence of centre-left Labour, and includes Likud, the ultra-nationalist Yisrael Beitenu, ultra-Orthodox Shas, and a small religious party.

Israel's Peace Now anti-settlement watchdog has called the incoming cabinet "one of the most right-wing governments ever known in Israel."

Peace Now activists planned to demonstrate outside the Knesset during the swearing-in ceremony, with banners that read: "A government of settlers is under way."

The new foreign minister will be Avigdor Lieberman, a firebrand former bouncer and immigrant from the ex-Soviet Moldova who has been branded a "racist" by critics for his anti-Arab diatribes.

With Netanyahu, who opposes the creation of a Palestinian state, at the helm and Lieberman as Israel's top diplomat, the international community has expressed alarm over the future of the already uncertain peace process with the Palestinians that was relaunched in November 2007.

The European Union last week warned of "consequences" if the new government does not commit itself to the principle of the two-state solution, saying relations would become "very difficult."

And US President Barack Obama admitted that peace efforts under a Netanyahu cabinet were not getting any easier but were just as necessary.

One of the main issues is Netanyahu's opposition to the creation of a Palestinian state, a principle to which Israel committed itself under the 2003 international roadmap for peace.

Netanyahu, who put the brakes on the Oslo autonomy accords during his first term as premier in 1996-1999, says economic conditions should be improved in the occupied West Bank before negotiations take place on other issues.

But keen not to antagonise key ally Washington where Obama has vowed to vigorously pursue the peace talks, the new Israeli leader has said he will continue the negotiations with the Palestinians.

Israel wants "total and real peace with a view to reaching reconciliation between the Arab and Jewish peoples," he said on Monday.

Palestinian president Mahmud Abbas the same day urged leaders at the annual Arab summit in Doha to lobby the international community, especially Obama's administration, to pressure Israel into accepting a "fair peace."

Despite his hardline rhetoric, Netanyahu signed several deals with the Palestinians under US pressure during his first term as premier, and some analysts in Israel say he would do so again if pressed by Washington.

Israel has also been involved in Egyptian-brokered talks with Hamas to achieve a lasting truce in and around the Gaza Strip in the wake of its deadly military offensive in the Palestinian enclave.

Relative calm has reigned in Gaza since January 18, when Israel and Hamas declared mutual ceasefires ending a 22-day war that the Jewish state waged on the territory in response to consistent rocket fire.

But on Tuesday, two Palestinian militants were killed and four others wounded in an Israeli air raid in Gaza, medics said.

The raid followed exchanges of fire between troops and militants near the Kissufim border crossing with Israel that wounded two Palestinians.

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