The new government of Israel has finally taken shape. Likud will lead a hodgepodge of right wing and left wing, secular and religious as well as capitalist and socialist. This, Benjamin Netanyahu and his coalition partners tell us, is the unity government that the Israelis want. But while the government appears to represent the full spectrum of the Israeli electorate, there is little to unify the coalition partners.

Labor and Likud vehemently disagree on how the peace process should be conducted. The former favours the two-state solution, the latter is doing everything in its power to avoid talking about a Palestinian state. Mr Netanyahu has always insisted that the economic development of the Palestinian Territories should take precedence over talks aimed at establishing a Palestinian state. His strategy is based on the notion that the Palestinian Authority is not adequately representative of the Palestinian people, and therefore incapable of negotiating any sort of peace treaty with Israel.

Like all convincing lies, there is an element of truth in his assertions. The Palestinian Authority is rife with corruption and nepotism. Nor has it ever been able to guarantee security in the West Bank or the Gaza Strip. Yet so long as Israel controls all traffic into and out of the Territories, economic development will always be strangled. The same goes for tourism, an industry with huge potential for Palestinians. All tourists to the Territories must pass through Israel, severely restricting the pool of visitors funnelling money into the local economy of a future Palestine.

Likud is unique in its strategy for peace and will have to compromise if it wants to make any progress at all. Labor will oppose most of its efforts, as will Kadima, which will control the largest number of seats in the Knesset, despite being in the opposition. Even Avigdor Lieberman’s Yisrael Beiteneu party supports a two-state solution in theory. Mr Netanyahu will be hard pressed to formulate a strategy that will satisfy anyone in the Knesset, including himself.

Shas, the right-wing ultra-orthodox party and the fourth-largest in the coalition, takes an even more severe view. It objects to a two-state solution on principle and will never compromise on the division of Jerusalem, a key component of the peace process. But Mr Netanyahu will struggle most severely with Shas in his efforts to cut government spending. Shas are pushing for an expansion of Israel’s crippling social welfare programme, which subsidises religious students and their families at great expense.

Despite the obvious importance of the peace process, the economy is by no means a small issue in Israel. While Labor, the social democrat party, claims it joined the coalition to ensure that the peace process survives, it is almost as important to them that Mr Netanyahu’s free-market capitalist tendencies are not given free rein. But Labor is deeply divided over the decision to join the coalition. Only 57 per cent of the party’s delegates voted in favour. It remains to be seen whether Ehud Barak can rally the support of his fellow MPs. If not, then Likud will struggle to pass any legislation through the Knesset.

And then there is Avigdor Lieberman, whose party made huge gains on the basis of his almost racist rhetoric and secular platform. Although he has received massive incentives for joining the coalition, including the foreign ministry, he has few allies and even fewer friends within the coalition. He is hated by the religious Right for his desire to legalise secular unions, and by the Left for his contentious remarks about the Palestinians. If this is unity, perhaps Israel, and the world, is better off without it.